American Review global perspectives On AMERICA

American renewal Clyde Prestowitz on how the shale gas revolution is a global game changer

PLUS Megan MacKenzie on women in combat John Lee on the new China myth Steven Hayward on Barack Obama’s brown climate agenda

No.12 2013 American Review global perspectives On AMERICA / MAY–AUG 2013 / ISSUE 12

American Opinion 5 Containment versus prevention Tom Switzer What the Boston terror and the North Korean nuclear tests mean

10 Paradox of Pakistan Anatol Lieven The perils of close security ties between Washington and Islamabad

16 The downside to globalisation Richard C. Longworth What ails the new white underclass in Middle America

Cover Story 20 Don’t write off America (again) American Clyde Prestowitz renewal A former high-profile pessimist does a volte face on US economic decline

28 The Pentagon’s gender U-turn Megan H. MacKenzie An afterword to the author’s groundbreaking article on women in combat in the distinguished Foreign Affairs magazine

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Cover Story 37 Obama won’t lead on climate change Steven F. Hayward Prospects for a legally binding and enforceable post-Kyoto global treaty are zero

46 The new China myth John Lee Flirting with Beijing does not amount to snubbing Australia’s great and powerful friend

54 Marshall Green’s legacy James Curran A leading diplomat knew that America should play the role of stabiliser, not crusader, in the Asia-Pacific

Book Reviews 66 The future world Ramesh Thakur Few dare mention that America could well be number two soon — but it’s highly likely

71 A Burkean guide for Republicans Greg Melleuish eighteenth century principles are not much help for slaying the federal Leviathan

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Book Reviews 76 Detroit haunts the American mind Jonathan Bradley But can the once industrial powerhouse of the Midwest make a comeback?

81 Decentralise military power Martin Morse Wooster How American business paved the way for victory in the war

86 Contributors

www.americanreviewmag.com

American Review is a quarterly magazine published by the United States Studies Centre at the University of Sydney.

Editor: Tom Switzer / Founding editor: Minh Bui Jones / Business manager: Sean Gallagher Sub-editor: Jonathan Bradley / Production editor: Susan Beale

The views represented in this journal are not necessarily those of the United States Studies Centre. The publisher takes reasonable care of any material submitted but accepts no responsibility for errors, omissions, or the consequences thereof. Contributors are encouraged to contact the editor first. Correspondence should be addressed to Tom Switzer, [email protected] or American Review, United States Studies Centre, Institute Building (H03), City Road, University of Sydney NSW 2006, Australia

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American 4 Review AmericanOPINION Tom Switzer

Spectre of 9/11 haunts America Prevention is justified against terrorists, but containment works against rogue states

This year is already a reminder of two important security lessons of the post-9/11 era: that heightened defences against very real terrorist threats in the US remain necessary; and that the twin strategy of containment and deterrence remains the most effective way of dealing with rogue states.

Start with the Boston terror attack on 14 April, which claimed three lives and more than 170 injuries. At the time of writing, US officials do not know what motivated the Tsarnaev brothers who are believed to have planted bombs along the finish line of the world famous marathon. What is clear is that this was an act of terrorism, and the price of enjoying everyday life in tourist venues, sports stadiums, shopping centres, and even a fun run is constant vigilance.

True, as the distinguished journalist Doyle McManus has observed, both the number of terrorist attacks and the number of deaths from terrorism in the US have declined since the attacks on the Pentagon and the twin towers. Moreover, the kind of mass terrorism that September 11 appeared to herald — a wave of bombings in public places — simply has not happened. McManus approvingly points to the thesis of Ohio State political scientist John Mueller: Americans are more likely to die by drowning in a bathtub than from a terrorist attack, even after Boston.

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Nonetheless, there has been good reason for the US to toughen up plans to combat terrorism — from hardening airports and ports at home to tackling extremists abroad, specifically in Afghanistan, Pakistan, Yemen, and North Africa. Although al Qaeda has been on the run across the globe, home-grown terrorists — such as Faisal Shahzad, the Pakistani- American who tried to explode a car bomb in downtown Manhattan three years ago — are lurking in the American midst. According to the New York Police Department, at least 16 terrorist plots against the city have been foiled.

The lesson is that constant vigilance and pre-emptive surveillance remain justified. There are, of course, risks and dangers involved: Washington has spent billions of dollars on homeland security, some of which has surely been wasted; some detentions and arrests have been unwarranted; and the government’s practice of torture has yielded mixed results at best and genuine human rights abuses at worst. Still, the message of Boston is that heightened defences against terrorist threats are in order a decade since September 11.

Which brings me to the other post-9/11 security lesson that has coincided with the 10th anniversary of the invasion of Iraq: how to deal with rogue states.

In recent months, North Korea has tested a third nuclear bomb, fired a missile into orbit, threatened a pre-emptive attack on the US mainland and South Korea, renounced the Korean war armistice of 60 years ago and signalled that it will restart its Yongbyon nuclear reactor to produce more plutonium for bombs.

What accounts for the North’s actions? Opinion among North Korea watchers varies. Many scholars think Kim Jong-un is trying to establish his bona fides in Pyongyang; some think he may be a reckless gambler intent on upsetting the natural balance of power in the region; others say it’s just bluff and bluster. The most plausible explanation is

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that the supreme leader of the Hermit Kingdom is trying to get the West’s attention and extract economic concessions from the North’s adversaries, just as his grandfather and father did in 1994 and 2005, respectively.

Whatever the explanation, President Barack Obama has been right to distinguish himself from his two immediate predecessors, George W. Bush and Bill Clinton, and shun direct negotiations with Pyongyang. Instead, he is beefing up the US defence measures against North Korea. Specifically, his decision in late March to send two B-2 stealth bombers and an Aegis destroyer over South Korea was prudent.

Meanwhile, there has been hardly any serious call for a preventive war or even pre-emptive strikes against the North’s nuclear reactors. Even the Wall Street Journal editorial page, a leading voice of neo-conservatism and cheerleader of the Iraq liberation a decade ago, recently argued: “Young Kim needs to understand that starting a war will mean nothing short of his and his regime’s extinction”. This is in striking contrast to the atmosphere of 2002–03 when prevention was the accepted wisdom in Washington.

After September 11, it was confidently predicted that the twin pillars of national security policy during the Cold War — containment and deterrence — no longer worked against those rogue states that comprised the so-called “axis of evil” (Saddam Hussein’s Iraq, the mullahs’ Iran, and Kim Jong-il’s North Korea). As President Bush insisted in 2002: “After September 11, the doctrine of containment just doesn’t hold any water as far as I’m concerned.”

Today, as the US and its allies respond to the threat posed by North Korea, it is clear that containment still has merit. If Kim lobbed some short-range missiles at South Korea, he would invite massive retaliation.

Of course, China remains the key to resolving the crisis. Although it supplies most of the North’s energy and about two-thirds of its food and

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humanitarian aid, it is running out of patience with what some Chinese officials call “the little upstart”. From Beijing’s perspective, however, a collapsed North Korean state or even a peaceful Korean reunification raises two serious threats to Chinese security: a flood of refugees into north-east China as well as an expanded US strategic orbit in what Beijing perceives as its sphere of influence.

In these circumstances, several American opinion leaders and former policymakers are calling on Washington to assuage Beijing’s concerns. That means indicating to China that the US would try to prevent or mitigate a refugee crisis and refrain from positioning forces along the Yalu River. At this stage, Beijing will probably hedge its bets and continue to prop up the regime rather than accept Korean reunification.

“If Kim lobbed some short-range missiles at South Korea, he would invite massive retaliation.”

Meanwhile, the twin strategy of containment and deterrence is keeping in check the impoverished and isolated state. And although there is always a danger that Kim won’t act rationally and may miscalculate, it is worth remembering that there has never been a full-scale war between two countries with nuclear weapons. After all, as distinguished foreign policy realist intellectuals such as Barry Posen, John Mearsheimer, and Kenneth Waltz have argued, to threaten, much less carry out a nuclear attack on a nuclear power is to become a nuclear target. Anyone who attacks the US or its interests in the region with nuclear weapons will be attacked with many more nuclear weapons.

All of this is why, in the case of Iraq a decade ago, there was every reason to believe that any threat posed by Saddam — a cynical calculator

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whose overriding concern was consolidating power, not exporting martyrdom — could have been contained as it had been since the 1991 Gulf War. Saddam knew if he smuggled weapons of mass destruction to al Qaeda or used banned weapons against US interests, his regime would have met, as Condi Rice put it a year before Bush became president, “national obliteration” from the US nuclear arsenal. Yet for preventive war advocates, containment allowed Saddam to defy United Nations resolutions and snub his nose at the international community.

Never mind that containment (sanctions, a naval blockade, the no- fly zone) kept Saddam in his box for more than a decade. And never mind that although containment lacked the ideological red meat the American people craved after the shock and outrage over September 11, it recognised the dangers of the unintended consequences a “liberated” Iraq has delivered since the 2003 invasion: huge costs in blood and treasure as well as diminished US credibility, prestige, and global standing.

The point here, as Richard Betts points out in a recent edition of Foreign Affairs, is that although containment does not work against terrorists, who can run and hide and, in any case, do not fear death, it can work against rogue states. After all, they have a return mailing address and they want to survive. As President Obama faces the challenge of dealing with nuclear-bound Pyongyang and Tehran, he should remember that if Stalin’s Soviet Russia and Mao’s Red China could be contained and deterred, so can North Korea’s communists and Iran’s mullahs. n

American 9 Review AmericanOPINION Anatol Lieven

The coming blowback Perceptions of subservience to Washington hurt Pakistan’s ruling classes at the ballot box

Pakistan exemplifies a problem for the United States in the Muslim world, and, indeed, in other parts of the world as well. This is that, on the one hand, US administrations are committed in principle to promoting democracy around the world. They are, of course, equally committed to advance what they perceive to be American interests. The problem is that large democratic majorities in a majority of Muslim countries oppose key American policies and their countries’ collaboration with Washington.

By far the greater part of the US and allied military drawdown in Afghanistan will have to be conducted across Pakistani territory and

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airspace. And even after most American troops leave next year, the US will retain bases, special forces, and advisors in Afghanistan. These will be in the middle of whatever Afghan situation develops in future — a situation over which Pakistan will have a very major influence.

Closeness to Washington has helped undermine the domestic legitimacy of many Muslim governments — which in turn helps explain why all public rhetoric to the contrary, actual US policy in the Muslim world has so often centred on support for dictatorships. With Pakistani general elections due on 11 May, this question has a new salience. If it is not as acute an issue as it might be, this is partly due to deep pragmatism — thoroughly soaked in cynical self-interest — on the part of the Pakistani civilian political elites, and partly due to the fact that in the end, it is the Army that decides the key issues of foreign and security policy, or at least exercises a veto over them.

Since 2008, America’s dilemma in Pakistan has been somewhat ameliorated by the fact that it had a democratically-elected but basically pro-Western government in power in Islamabad: the Pakistan People’s Party under President Asif Ali Zardari. The PPP’s election victory in 2008 was partly the result of a deal brokered by the Bush administration between the last military dictator, General Pervez Musharraf, and Zardari’s late wife Benazir Bhutto. Much more important was the wave of public sympathy for Zardari and the party when Bhutto was assassinated by the Pakistani Taliban after her return from exile.

All the opinion polls, however, suggest that the PPP is facing a very serious defeat in the next elections, quite possibly losing half its vote and slumping to 15 per cent of the total. How so? Because of (accurate) public perceptions of corruption and incompetence, but also because it has been seen as far too subservient to Washington. Under Pakistan’s first-past-the-post electoral system, the result in terms of seats is unlikely to be so bad. After all, the party’s strong

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regional bases in the province of Sindh and parts of southern Punjab mean that it can probably continue to dominate these areas. However, during a trip to Pakistan in March, most analysts I met said that it would require something like a miracle for the party to continue to lead the national government.

The biggest winner seems likely to be the Pakistan Muslim League, another dynastic party led by different sections of Pakistan’s political and social elite. The PMLN has a moderate conservative agenda, with a very strong grip on Pakistan’s industrial and agricultural heartland of northern and central Punjab. It will not win an absolute majority — something that has only twice been achieved in Pakistan’s history — but will probably lead a coalition government at the centre.

“Washington has very strong reasons to continue to support the Pakistani state and military to combat the rise of extremism.”

The PMLN has made some play with anti-American rhetoric, but its bosses, and the industrialists who back them, are well aware of the catastrophic consequences for Pakistan’s staggering economy of a breakdown of relations with Washington. This is not because of US aid, which has been very limited and mostly directed to the military. The real threat would be a loss of US goodwill at the International Monetary Fund, whose loans really have been critical to maintaining even a bare minimum of economic stability, and, in the event of a really serious crisis, the catastrophic menace of US economic sanctions.

There are, however, two very significant potential wild cards in these elections — one old, and one new. The old ones are the religious

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parties, which have never won more than a small minority of the votes in national elections, but which in 2002 won a majority in the crucial North-West Frontier Province (now Khyber-Pakhtunkhwa). Their rule between 2002 and 2008 is widely blamed for having helped to shelter the growing Pakistani Taliban insurgency in this region. After suffering a severe defeat in 2008, the religious parties are expected to do better this time.

They may be able to form a coalition in Khyber-Pakhtunkhwa with the populist Tehrik-e-Insaf (Justice) party of former cricket star Imran Khan. His party is widely expected to do well, possibly beating the PPP into third place in the national vote and gaining a share of national government. Imran Khan’s support is strongest in Khyber- Pakhtunkhwa, where his party may well lead the government. Like the religious parties, Imran Khan has been a bitter critic of the US “occupation” of Afghanistan, and a strong advocate of peace talks with Pakistan’s own Islamist rebels.

If it happens, this partial ascendancy of anti-American parties will probably not have much direct impact on the US and Western withdrawal from Afghanistan. This area of policy effectively remains firmly under the control of the military. As senior officers told me during my visit to Pakistan in March, they are committed to maintaining their present course, which is to urge Washington to pursue a peace settlement with the Afghan Taliban. They have stated their willingness to influence the Taliban in the direction of a settlement — but only if the US delivers a peace plan which they think that Mullah Omar and his colleagues have some chance of accepting.

When it comes to more direct forms of pressure, the military intends neither to launch any military actions against the Afghan Taliban to push them to make peace, nor to influence the US by interrupting its communications via Pakistan. The only way that this would change is if there were another serious incident with US forces

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— whether another ground raid into Afghanistan like the one that killed Osama bin Laden, or a repetition of the Salala clash in 2011, when 24 Pakistani soldiers were killed by a US air strike. In this event, the new configuration of Pakistani politics might help drive a tougher Pakistani response than in the past — with disastrous results for US– Pakistani relations.

But the real danger posed by the potential dominance of the conservative, religious, and populist parties relates not to the Afghan, but the Pakistani Taliban. All of these parties have exploited — and encouraged — the general public perception in Pakistan that the Pakistani Islamist insurgency stems from American actions in Afghanistan, and that it should be ended by a negotiated settlement. If elected, they will have to go some distance in this direction.

In the federally-administered tribal areas along the border with Pakistan, this is unlikely to get very far, because the Army have made it very clear that they will not tolerate handing back to the rebels land that the soldiers have reconquered at such high cost, or peace agreements which lead to the military withdrawing to their bases. This they see as a return to the disastrous pattern of 2003–2009.

Elsewhere in Pakistan, however, the lead force in combating extremism is not the army but the police — which is chiefly a provincial subject. There is already circumstantial evidence to suggest a covert agreement between the PMLN government of Punjab and the militants whereby in return for immunity from attack by state forces, the militants promise not to launch terrorist attacks in that province. PMLN leaders have promised to take a strong line against domestic militancy if they form the national government. But such an outcome is by no means certain, and no one can guarantee that the new government of Khyber-Pakhtunkhwa will not allow more space to the rebels.

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Even more menacing is the situation in the city of Karachi, where the Pakistani Taliban may be emerging as the dominant force in the city’s huge Pashtun minority, and have in recent months launched ferocious terrorist attacks against their local sectarian and ethnic rivals. Karachi now has a population of some 20 million people. A serious upsurge of violence there, on top of the rebellion in the tribal areas, would test the Pakistani military to the very limit.

In recent years, the war in Afghanistan has meant that in Pakistan, western attention has been concentrated on the Pashtun areas along the Afghan frontier, where militancy has been strongest and where the Afghan Taliban have their bases. However, Karachi is now the third or possibly even the second biggest Pashtun city in the world, after Kabul and Peshawar. Terrorist attacks directed against the West and India can just as well be planned and organised there as in the tribal mountains.

All of this means that Washington has very strong reasons to continue to support the Pakistani state and military to combat the rise of extremism in that country as well as to preserve Pakistan as a state, albeit a deeply imperfect one. These reasons will remain justified after US forces have withdrawn from Afghanistan. Unfortunately, though, the rhetoric that is likely to emerge from parts of the new Pakistani political establishment after the next elections is unlikely to help the Americans remember this rationale, or to win the goodwill of many US politicians. n

American 15 Review AmericanOPINION Richard C. Longworth

The new white underclass Blame globalisation and automation for the decline of old middle America

There’s a geography of inequality in modern America and you can explore it in a day’s drive.

Start in Chicago’s glittering Loop, perhaps at the corner of Michigan Avenue and Adams Street, where the fabled Route 66 began. It’s a great neighbourhood, with the Art Institute across the street and the Chicago Symphony a half-block south. This is the way global cities are supposed to look. If America has problems, you can’t see them from here.

Then head south or west along one of Chicago’s expressways named after dead politicians, mostly Democrats. After three miles or so, take an

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exit ramp into neighbourhoods like Englewood or Lawndale, blighted inner areas holding a black underclass left behind decades ago. It’s OK by day, but don’t go there at night: along with their appalling poverty, these neighbourhoods are the epicentre of Chicago’s current murder epidemic. You’re still in town here, close enough to see the skyscrapers of the Loop, but for the people who live there, that silver city could be a million miles away. This is “traditional” poverty and inequality, rooted both in race and economics, the way it’s been for a half century.

Now get back on the expressways and take them out of town. Drive 100 or 200 miles, into downstate Illinois, or into central Indiana or eastern Iowa or almost any place in Michigan. Take an off-ramp at random, hit the back roads, and roam the old farm and mining towns of the Midwest. These forgotten hamlets are the home of the new underclass, a white underclass this time, a working class without jobs to do, stranded without education or useful skills in a 21st century economy that has no use for them.

This is the urban-rural divide, the new poverty that Americans are just beginning to recognise.

America basically wrote off its inner-city blacks — their unemployment, bad schools, drug use, single-parent households — a generation ago. Now this country is just waking up to the pathology of its new white underclass — the same unemployment, the same bad schools and drug use, the same familial breakdown, the same hopelessness.

New statistics dramatised this situation but got relatively little attention, perhaps because they seem incredible to most Americans. Based on census figures, they showed a decline in longevity among the poorest and least educated Americans. Life expectancy for white men without a high school diploma has dropped by three years since 1990. For white women drop-outs, it’s even worse: down by five years.

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This is as nearly bad as the six-year drop in life expectancy for Russian men in the last years of Communism. Even in the black ghettoes of American cities, we’ve never seen anything like this: longevity for black men dropped by a year or two between 1984 and 1989.

Russian men drank themselves to death. The decline for black men in the ’80s was blamed mostly on HIV and homicides. But what’s going on with this new white underclass?

No one knows for sure. My guess would be that much of this is concentrated in rural areas, in the post-industrial Midwest but also in the backwaters of New England, the dying villages of the Great Plains, the impoverished South, inland California, the water-starved wastes of Oklahoma, and the great swath of hillbilly America from Virginia into Oklahoma.

Much of this area, like the Midwest, depended on companies and industries that relied on cheap and unskilled labour and were quick to be outsourced. Drug use — methamphetamine more than heroin — is widespread. County hospitals are closing. Small-town doctors die and are not replaced. One big Walmart can kill off local groceries for miles around, leaving rural people with nothing but a gas station shop where the closest thing to a real meal is frozen pizza. In America’s farm belt, food deserts are common and malnutrition is a serious problem.

It’s hard to imagine two clans more isolated from each other than inner-city blacks and rural whites. But increasingly they share the same pathologies, for the same reason: their jobs went away. The blacks just got there first — four or five decades ago — and now are deep into the generational poverty that awaits the whites who, until recently, could consider themselves middle class.

Many urban whites also have been pushed into poverty by the twin forces of globalisation and automation; even college graduates

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are stocking shelves or running cash registers to keep going. But as city dwellers, they at least live near supermarkets, hospitals, and the other artefacts of a functioning economy.

The trends for rural Americans point down. All statistics indicate that marriage and family life is good for your health, but no fewer than 54 per cent of high-school dropouts — the same people with shortened life spans — are having babies outside marriage. Banks are the crucial source of funding for local economies but, as online banking grows, big banks are closing their small-town branches. Higher education is a pathway to economic stability but Midwestern states have all but stopped supporting the big state universities that once educated rural students; the universities, strapped for cash, are turning to Asian or wealthy students who can afford the tuition and fees, squeezing out local students who can’t.

Many rural secondary schools, like many inner-city schools, are inferior. Relying on property taxes, their income plunges as property decays and falls off the tax rolls. As population dwindles, schools become empty but old rivalries block the logical solution, which is consolidation. Few rural areas can draw the good teachers or afford the facilities, let alone broadband, that are key to an information-age education.

Ambitious students, mostly from middle-class backgrounds and intact homes, escape rural areas for a good education and a job in the city, just as ambitious black students escape the ghettoes. In both cases, these students vow never to go back.

Behind them they leave the castoffs of the global economy, occupants of the same country, perhaps, but a different universe. n

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A new American Century The shale gas revolution gives a new lease on life to the US

By Clyde Prestowitz

Conventional wisdom says that America is in decline, that the American century is over, and that the future belongs to the rest, especially the rest in Asia. Dates vary, but predictions that China’s gross domestic product will soon surpass that of the US to become the world’s largest economy are legion. In 2011, the International Monetary Fund predicted it will happen in 2016. More recently, The Economist put the date at 2019. Regardless of the exact time, prominent authors such as CNN commentator Fareed Zakaria (The Post American World) and Lee Kuan Yew School dean Kishore Mahbubani (The Great Convergence: see review page 66) have rushed to publish books predicting an historic shift in the global balance of power as a result of this change in relative share of global GDP. Indeed, the Australian government recently indicated its agreement with this thinking by moving to redeploy its resources and reorient its policies in response to a white paper on Australia in the Asian Century.

Yet, there is growing evidence that all of this analysis

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may be a bit premature and that America is not only coming back but that this century may well wind up being another American century.

For one thing, the numbers can be slippery. As Mark Twain once noted, there are “lies, damned lies, and statistics.” The prediction that China’s GDP will surpass that of the US in the next few years is based on GDP calculated at what is known as purchasing power parity. This is a way of adjusting the GDPs of different countries to account for the fact that their citizens have different standard market baskets and pay different prices for them. For example, Americans tend to eat potatoes while Chinese eat rice. Potatoes may be relatively cheap in the US and relatively expensive in China with the reverse being the case for rice.

So if you compare the two countries on a potatoes-to-potatoes basis, China’s GDP may appear small. But if you consider then on a rice-versus-potatoes basis, the two would be more equal. Another example is the McDonald’s Big Mac burger. Since it is popular in both countries, we can compare the prices easily. Let’s say a Big Mac costs $1 in China and $2 in the United States. So the purchasing power of $1 in China is equal to that of $2 in the US and China’s GDP should be adjusted accordingly in comparing it to the US GDP.

This PPP method of adjustment is very useful and important but it is not a completely satisfactory or meaningful means of comparison. On the one hand, obtaining completely comparable market baskets in two countries is quite difficult, and the more so when comparing relatively open, free market economies to those that are more closed and highly regulated. On the other hand, all international transactions are done at the nominal exchange rates, not at some adjusted PPP rates. In terms of international buying power, you can’t take your $1, or RMB 6.5, that buys a Big Mac in Beijing and use it to buy a Big Mac in Seattle. There, you would only get half a Big Mac. The point is that at PPP, China’s GDP is presently calculated at about $12.4 trillion, or about three-fourths the US GDP of $15.6 trillion. At nominal exchange

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rates, however, the Chinese GDP is $8 trillion, or only about half the US GDP.

If China grows at 8 per cent annually while the US grows at 3 per cent, it’s clear that at PPP the Chinese GDP would pass the US GDP in the near future as predicted. But it’s also clear that it would not do so at nominal exchange rates. And, indeed, if China’s growth rate slowed a bit, its GDP might never surpass the US GDP. China’s growth rate has been slowing and almost surely will continue to slow as its work force shrinks (it shrank for the first time last year) and its population ages rapidly over the next thirty years. Moreover, even if China were to surpass the US in size of GDP, no one is predicting that it will come anywhere near the GDP per capita of the US, which is, after all, the truest measure of wealth and power.

“Given that about a third to a half of the US trade deficit is energy related, fracking is likely to reduce the deficit dramatically.”

When the commentators talk about a shift in the balance of power they often compare China surpassing the US to the passing by the US of Great Britain in the late 19th century. But, in fact, that was an entirely different phenomenon. America not only passed Britain in terms of GDP at PPP. It also passed Britain in terms of GDP at nominal exchange rates and in terms of GDP per capita. The US became the world’s largest economy on all counts. That is not going to happen in the case of China and the United States.

Indeed, it is not at all clear that China will surpass US GDP even at PPP. Keep in mind the next time you are in China and find yourself choking on the foul air that the things making the air foul are counted as positives for GDP. If you adjust the Chinese GDP for environmental

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degradation and for over-investment in things that will never be used, it falls in size by 30–50 per cent. Much of this would show up as non- performing loans in most economies but since such loans are never recognised in China, it will show up as slower growth in future years. Either way, it means that the predicted shift in economic balance may not occur even at PPP. Or, if it does occur, there may be a shift back in the not too distant future.

Beyond the statistics, other even more powerful factors are at work. A recent trip around the world confirms that all is not well in many parts of the global economy. Japan, facing population decline from 128 million to perhaps only 88 million people over the next thirty years and with extremely rapid ageing and a national debt of 240 per cent of GDP, is making a desperate gamble with Abenomics that it can shake off two decades of deflation by having the Bank of Japan engage in massive buying of assets. Even if it works, this so-called quantitative easing will not solve the population and other deep structural problems of Japan. And the chances that it won’t work are significant. Long the world’s second largest economy, with a GDP that at one point equalled about three-fourths the US GDP, Japan now has a GDP only one-third that of the US. South Korea appears to be in somewhat better shape, but its population decline and ageing rates are worse than Japan’s, and any recovery by Japan will entail damage to South Korea’s export dependent economy.

China has been the great story of the past quarter century and still is a good story. But as several analysts, including Martin Wolf of the Financial Times, have recently noted the miracle days are past. China has followed a growth strategy based on huge investment, sometimes in excess of 50 per cent of GDP. It has now hit a point of diminishing returns. Each new dollar of investment yields a bit less growth than the previous dollar. Beijing must make a shift to a more consumption and services driven economy.

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This is an extremely difficult shift to make, as demonstrated by the failure of Japan and Korea to yet make it. To offset the impact of the Great Recession of 2008–2011, China opened the flood gates of public works and easy money, especially for construction. On 17 April, the Financial Times reported that one of China’s top auditors warned that local government debt is “out of control”. Also out of easy control are the demographic factors touched upon earlier. Because China’s work force is now shrinking, it must dramatically increase its productivity to have any chance of matching the size of US GDP. Some analysts think this would require a tripling or even quadrupling of Chinese productivity. For a long time the key question has been whether China would get rich before it gets old. The answer increasingly appears to be no.

India has good demographics with a growing, youthful population, but beyond that the Indian story is a very mixed one. Corruption is rampant and constitutes a huge drag on growth. The political system is slow, inconsistent, and often incoherent. The title of one best seller — India Grows at Night — says it all. The government isn’t working at night. India will probably continue to grow at 5–7 percent for some time, but here too the miracle appears to be over.

As for Europe, it is a nightmare. Austerity is the order of the day. Germany’s is the only economy with any growth at all and it’s not much. Most European countries have rapidly ageing and shrinking populations and increasingly difficult to carry welfare burdens. Whether the European Union and the Euro will survive are still open questions. In any case, there is no chance that Europe will lead a global revival.

That brings us to the US. Certainly, it has significant problems. Its government debt is high and federal budget deficits large. Unemployment is stubbornly hanging around 7.7 per cent despite strong quantitative easing by the Federal Reserve. Its infrastructure was just given a grade of D — very poor — by one of the leading engineering societies. Its students score only in the middle on the Program for International

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Student Assessment international comparison tests, and, of course, its banking practices and financial policies were a large source of the global economic crisis of the past five years. All true.

But where would you most like to put your money? The record highs of the Dow Industrials and the S&P 500 tell us that for a lot of people, the US is the place. Why?

For all the problems, the future is looking brighter and brighter and, in comparison to the likes of China, more stable. Start with the big trends. US demographics are among the world’s best. It will have steady 1–2 percent population growth for as far as the eye can see, both as a result of domestic births and of continuing immigration. Thus, compared to the rest of the world, with the possible exception of India and Africa, the US work force will expand and will become relatively younger. The US dollar is and will remain the world’s main reserve currency for a long time. It appeared for a while as if the Euro might be a viable alternative to the dollar, but that fantasy is now on life support.

The Chinese keep complaining about the role of the dollar and keep making bilateral deals to do trade settlements in renminbi and local currencies. But until Beijing is ready to open its capital markets, the RMB is unlikely to become a reserve currency. Since open capital markets have enormous implications for political power and stability, few are holding their breath waiting for Beijing to throw wide the gates. Thus, printing the world’s money will continue to give America a degree of flexibility and invulnerability that no other country can have.

Serious as the US debt and budget numbers are, they are beginning to get better. Households and businesses have largely repaired their balance sheets and the federal budget deficit has declined from 10 per cent of GDP to a bit over 4 per cent and is heading lower. The US economy is now headed for 3 per cent growth in 2013 according to a

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number of leading analysts. As this continues, government revenues will rise and the deficit will continue to fall. Ugly as it may look, the sequestration of US government funds is leading to substantial cuts in spending, so that more than half the target debt gap of about $4 trillion has already been filled.

Of perhaps greatest significance are two dramatic technological and geological developments. Of course, technology, inventiveness, venture capital, and entrepreneurial spirit have always been American strong points. In few other places do such endeavours as Google, Apple, and Facebook sprout up as frequently as in America. But these bright spots didn’t seem to reverse the trend of decline. Apple, for example, became the world’s most valuable company, but it did most of its production outside the United States. GE was another iconic American company that led the world in things like avionic technologies. But it transferred these to China, Brazil, and elsewhere.

In the last five years, however, the technology to obtain natural gas and oil from shale rock formations by fracking has turned the world upside down in America’s favour. The US has extensive shale formations over much of the country and these contain as much oil and gas as Saudi Arabia and enough to power America for more than one hundred years. Even more importantly, the cost is very low. The price US factories pay for gas is one third that of German factories and a quarter that of South Korean factories. Cheap gas is also translating into cheap electricity so that US factories pay half for electricity what a Mexican factory pays and a quarter of what an Italian factory pays. Nor is it just a matter of gas. US oil production has risen by a third over the past four years and America will soon overtake Russia and Saudi Arabia to become the world’s biggest producer of oil and bio-fuels.

Needless to say, any industry for which energy is an important input is suddenly looking at investing in the US. The gas/oil boom is making America largely energy independent while sparking a huge

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investment and job creation wave that is adding about a half a per cent to GDP growth annually as a lot of manufacturing moves back to America. Given that about a third to a half of the US trade deficit is energy related, fracking is likely to reduce the deficit dramatically.

The second technology revolutionising production and manufacturing in America’s favour is 3D printing. In this process, printers like those that do computer printouts deposit layers of metals, plastics, and other materials to create such things as auto and airplane parts, furniture, toys, and almost anything else you might want to make.

Indeed, in one case, a whole house was built from scratch by 3D printers. The beauty of the technology is that it can be designed to make unusual shapes at low cost and production and can be expanded gradually and evenly without huge investment in capital equipment. Because production can be done economically in relatively small batches, the production can be done close to the location of demand, thus avoiding large shipping and handling costs. This technology is, of course, not unique to America, but because America is a country of such high demand supplied by a long global supply chain, 3D printing is likely to have the most revolutionary impact by moving much of the production closer to the source of demand, and thereby rearranging the supply chain while greatly reducing the US trade deficit.

Thus America emerges as the major country with the best demographics; the best energy picture; an improving budget and debt picture; the best technology, research and development, and innovation picture; the main currency; the most powerful military; and the most balanced economy.

Perhaps Australia would do well to commission another white paper: Australia in the New American Century. n

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The Pentagon still needs a face lift Notwithstanding the removal of combat exclusion, obstacles to genuine gender equality in the US forces remain

By Megan H. MacKenzie

Despite multiple calls to review the combat exclusion for women, impending lawsuits, and growing evidence of women’s contribution to the wars in Iraq and Afghanistan, the Pentagon’s 24 January announcement to lift its ban on women in front-line combat roles was surprising. For years, Congress and the Department of Defense had justified the exclusion as essential to national security. The Center for Military Readiness, a conservative non-profit think tank that focuses on personnel policies of the US military, had argued that women’s inclusion in combat would dilute entrance standards, provoke greater rates of sexual tension and harassment, and unnecessarily place troops at risk. Just last year, then–Pentagon press secretary George Little announced that although 14,000 new combat related jobs would be opened to women, infantry and direct combat roles would remain off limits.

The origins of the exclusion date back to 1948 when Congress passed the Women’s Armed Services Integration Act, which established a regular corps of women in all of

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the services. The Act also limited women to 2 per cent of the total servicers and restricted women from combat duties. The exclusion policy was “given implicit legal sanction” in 1981 when the Supreme Court ruled in Rostker v. Goldberg that the all-male draft did not constitute gender-based discrimination. During the next two decades, thanks to the transition to an all-volunteer force in 1973 and the military’s search for increased “manpower”, the number of women in the armed forces drastically increased.

These trends, combined with attention to labour equality rights at the time, resulted in reviews and changes to restrictions on women’s roles in the forces. The most notable change came in 1994 as a result of then–Secretary of Defense Les Aspin’s memorandum “Direct Ground Combat Definition and Assignment Rule”. This memorandum rescinded the “risk rule” that barred women from many positions based on their perceived level of danger. Following the removal of the risk rule, women were declared to be eligible for “all positions for which they are qualified,except ... units below the brigade level whose primary mission is to engage in direct combat on the ground.” This exception constituted the foundation of the combat exclusion that existed within the US until January 2013.

So, how to account for what the New York Times hailed as a “groundbreaking decision”?

The impetus might have been the impending lawsuits waged by several groups of servicewomen calling the exclusion discriminatory and against their civil rights. These included a highly publicised suit filed by the American Civil Liberties Union in November 2012. It is possible that the Pentagon wanted to pre-empt any legal decisions and be in control of the policy change and implementation process.

The increased evidence of women’s contributions in combat operations in Iraq and Afghanistan may have also contributed to the

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policy shift. By January 2013, more than 280,000 women had served in Iraq and Afghanistan: hundreds of those have received Combat Action Badges and nearly 150 female officers have died. It had become increasingly difficult to justify a combat exclusion as the military formally recognised women’s valour in combat and extended combat pay to women serving on so-called front lines.

Another motivation for the change may be personal: Leon Panetta, a long-time advocate of women in the forces. In February 2012 — precisely two months before the policy volte face — the then–defence secretary declared: “We will continue to open as many position as possible to women so that anyone qualified to serve can have the opportunity to do so.” Panetta, who stepped down in February, had made it clear that he wanted women in combat to be part of his legacy.

“As the Pentagon moves towards encouraging women into more roles within the military, it must acknowledge factors like sexual violence.”

Still another explanation for the change is that something was needed to show solidarity with women, while at the same time distracting attention away from the increased negative attention and startling statistics regarding sexual violence within the US forces.

Whatever the reasons, the announcement that women would be allowed to serve in combat was a landmark decision with potentially wide-reaching implications. Unfortunately, it is far too early to celebrate the change as a gender victory.

Late last year, I published the essay “Let Women Fight: ending the

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US Military’s Female Combat Ban” in Foreign Affairs, in which I called for the removal of the combat exclusion. I argued that the policy was discriminatory, outdated, and out of touch with the reality of modern warfare.

My arguments, however heartfelt, were made with some trepidation. After all, it was one thing for the Pentagon to remove any gender-based barriers to service, which in and of itself is a positive step for the military. But when it comes to the significance and potential impacts of the change, the devil is in the detail.

Indeed, there are four potential obstacles to the goal of genuinely improving diversity and gender equality in the forces: the implementation process, outdated physical standards, rampant sexual violence, and sustained sexism within the forces.

Start with the implementation process for the combat exclusion. While it has been made clear that the services have until May to create a plan for implementation, the Pentagon is allowing three years for final decisions and pathways forward from the services.

The time frame is not the main issue here. In fact, a three-year implementation process is shorter than the five-year process the Australian Defence Forces set up upon its 2012 announcement that it would remove the combat exclusion. As General Martin Dempsey, the Chairman of the Joint Chiefs of Staff, has declared, “To implement these initiatives successfully and without sacrificing our war-fighting capability or the trust of the American people, we will need time to get it right.” Rather than timing, the issue with the implementation process is the lack of clarity as to how much power each of the services will have to keep some doors shut to women.

It has been reported that services are able to ask for exceptions to the policy and request that particular roles remain restricted to women.

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This could mean that the services fall back on old arguments about physical standards or the importance of all-male bonding to group cohesion for particular units, sustaining gender divisions and keeping women from fully integrating into the forces. While it remains to be seen, giving significant power to the services to create exceptions to the reversal of the combat ban could create a substantial loophole that maintains restrictions for women.

Second, decisions regarding physical standards and tests for men and women will greatly affect women’s integration into additional roles. For years, concerns that women “just can’t make the cut” when it comes to physical fitness were used to justify their exclusion from key roles, including infantry. Today, it has been widely acknowledged that physical standards for various services were created decades ago, to measure men’s bodies, and with World War II–style military operations in mind. Women and their advocates are not asking for “lowered” standards, as some critics would argue. Rather, there has been a call for a general review of the standards to ensure that they measure job effectiveness and do not favour men by design.

While it is clear that there are indeed physical differences between men and women, experts within the US have long recognised that current physical standards are outdated and do not necessarily measure job capabilities. Back in 1998, the US General Accounting Office admitted that physical standards tests were not necessarily an effective indicator of operational effectiveness: “The physical fitness program is actually intended only to maintain the general fitness and health of military members and fitness testing is not aimed at assessing the capability to perform specific missions or military jobs.”

Furthermore, in an interview with National Public Radio in February 2013 General Dempsey acknowledged that current standards for military roles need substantial review: “There are existing standards, many of which haven’t dusted off in a very long time, [and] many of

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which have been narrowly focused just on physical standards, but without the companion piece of potentially psychological and intellectual standards.”

Despite this general acknowledgement of the need for a review of physical standards, there seems to be internal disagreement within the services as to how such a review will take place as part of the implementation strategy for the combat ban reversal. More specifically, while Lieutenant General Robert Milstead, deputy commander for manpower and reserve affairs, announced an extensive plan to review and verify the physical requirements associated with roles previously closed to women, it appears that not all the services are keen to initiate changes.

Only weeks following the 24 January announcement, the Marine Corps declared that it would not be adjusting its physical standards in light of the exclusion policy change. Marine Colonel Jon Aytes expressed confidence over the existing physical requirement, noting “We’ve been in the Marine business for a long time.” Without a comprehensive update of current physical standards, women may remain de facto excluded from many roles as they struggle to meet physical requirements designed for male bodies rather than job demands.

Third, the military is still scrambling to deal with its sexual violence epidemic. Statistics about sexual violence in the forces are staggering. Between 1 October 2010 and 31 September 2011, the military’s own Sexual Assault Prevention and Response Office estimated that there were 52 reported sexual assaults a day. The department acknowledges that reported incidents likely make up only 14 per cent of total cases. The Department of Veterans Affairs found that half of the women who served in Iraq and Afghanistan were sexually harassed and almost one in four were sexually assaulted.

In March 2013, during the first Senate Armed Forces Committee

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hearing on sexual abuse in over a decade victims of abuse came forward calling the military justice system ineffective, pointing to evidence that the military continues to protect perpetrators and silence victims. As the Pentagon moves towards encouraging women into more roles within the military, it must acknowledge factors like sexual violence, which make the military an increasingly unattractive workplace for women. Inviting women to join previously all male units in such an environment is irresponsible and unsafe. Simply opening up jobs for women does not address this deep-seated issue and does not make the military more welcoming for women.

Finally, there is continued sexist bias and sexist attitudes towards women in the US military more generally, and in regard to women in combat in particular. Arguments against women in combat often take the form of largely unsupported fears of the public’s reaction to “women in body bags”, ideals about the inherently nurturing, weak, and pacifist nature of women, concerns that men will not be able to control their sexual urges around women in close confines, speculation that men’s natural drive to protect women will overcome their ability to do their job, and a generalised sentiment that “women just don’t belong”.

Such arguments have been made throughout history and persist today. When advocating against including women in the British Home Guard during World War II, for example, British Member of Parliament David Robertson claimed, “a woman’s duty is to give life, not to take it.” More recently, during his candidacy for the Republican presidential nomination Rick Santorum expressed concerns about the inherent emotional nature of female combatants, positing that “instead of focus[ing] on the mission, [male soldiers] may be more concerned about protecting … a woman in a vulnerable position.”

Such positions are based on gendered ideals about men and women’s inherent nature and removing the combat exclusion will not make them go away immediately. For example, in a Newsweek interview following

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the removal of the exclusion, law professor and military expert Kingsley Browne argued that men “aren’t hard-wired to follow women into danger” and claimed that there are “a lot of military people who think women in combat is a horrible idea, but it’s career suicide to say it.” In his Daily Beast opinion piece “The Truth About Women in Combat,” David Frum lamented that the removal of the combat exclusion constituted a denial of “reality” and reiterated previous arguments for sustaining the exclusion, including the need for male physical strength and the apparent inherent differences between men and women. An entire webpage titled “Grunts against women in combat,” with over 3000 members, was initiated to allow for frank discussions between servicemembers about the reasons why women should not be allowed on the front lines. One contributor noted that infantry life was “worth living” primarily because of the “unconditional brotherhood between myself and the men I fought next to in combat.” He predicted that if women are included into this atmosphere “that spirit will rapidly become a thing of the past”.

Again, the military cannot simply open up combat roles to women without addressing these lingering and embedded stereotypes and concerns regarding the impact of women on combat units. Indeed, one cannot help but imagine the following job advertisement for women’s new potential roles in combat:

“Wanted: women to fill direct combat roles; must be able to meet a physical standards test designed for men, be comfortable working in a largely all-male environment, accept the risk that they are more likely to be sexually assaulted than not, and must be willing to continually justify their contribution and value to the institution.”

Needless to say, removing barriers will simply not be enough to address some of the substantive gender crises that the military is facing. True, attitudes will likely change over time, as more women prove

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themselves competent within new roles. But this change needs to be facilitated with education, awareness training, and strong leadership on gender integration. Without widespread efforts to initiate structural changes and influence a hyper-masculine military culture, the policy pivot of reversing the combat exclusion will do little to “break the brass ceiling” or improve working conditions for women in the forces. n

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Obama’s brown agenda Don’t expect the President to implement sweeping plans to decarbonise the US economy

By Steven F. Hayward

Political partisans are always faced with disappointments from their heroes, and Barack Obama is no different. In his first term, Obama was unable to deliver “card check” (a scheme to force automatic enrolment in labour unions), the top item on the wish list of his key backers in organised labour. Although he did manage to get Obamacare through Congress, its unpopularity cost his party its majority in the House of Representatives while disappointing many on the left who think it didn’t go far enough towards single-payer universal coverage. His failure to close the Guantanamo detention facility while expanding several other aggressive Bush-era national security policies, including the controversial drone program, has many leftists gritting their teeth. By far, however, the biggest disappointment for Obama’s left-liberal coalition has to be his handling of energy and environmental issues.

Obama is the author of the near-messianic expectations the climate enthusiasts held for him,

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proclaiming on the night he clinched the Democratic Party nomination in 2008 that “generations from now, we will be able to look back and tell our children that this was the moment ... when the rise of the oceans began to slow and our planet began to heal.”

Right now, however, honest environmentalists are telling their children that Obama stood aside while the House of Representatives’ legislation on climate mitigation died a slow death in the Senate, despite impassioned pleas for him to make an effort to push the bill across the finish line. (These pleas fell on the deaf ears of Obama’s first-term chief of staff, Rahm Emanuel, who one account described as “an obstacle to meaningful climate legislation”.) Despite Obama’s 11th hour intervention in Copenhagen in 2009, the UN Kyoto process hit the wall anyway.

The result of Obama’s lavish push for “green energy” in his 2009 orgy of stimulus spending ranges from pathetic job creation numbers to serial bankruptcy to outright crony corruption (such as Solyndra, the politically connected solar power company that soaked up $535 million in subsidies before going belly up). Add to this other Obama environmental decisions, such as cancelling a new ozone standard and delaying a new mercury regulation. Imagine the response from environmentalists if a Republican president had taken the same steps.

True, environmentalists are partially mollified over the one thin bone Obama has held out for view: the delay in deciding on the Keystone XL pipeline, the proposed conduit for the massive amount of new Canadian tar sands oil that has rapidly come online over the last decade. Environmentalists remain nervous that Obama may yet capitulate on Keystone, hence the continuing highly visible protests and civil disobedience outside the White House and wherever Obama travels. Obama’s feckless performance over Keystone summons forth every stale cliché of political journalism: he’s caught between a rock and a hard place, trying to fend off a perfect storm of tipping points

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that are sure to offend one or another of his key constituencies. (Pro- Obama labour unions have been vocally in favour of building Keystone, along with expanded hydrocarbon production on government-owned land.)

The Keystone fight, however, is merely symbolic of a much larger dilemma facing Obama — the politically convenient but ideologically inconvenient fact of the hydrocarbon energy boom currently underway in the US. The natural gas boom delivered by new drilling technology employing hydraulic fracturing (“fracking”) gets most of the notice, but US oil production is also unexpectedly soaring, dramatically reversing a steady 20-year decline. The 40 per cent increase in US oil production over the last five years — the largest increase of any nation — has had the concomitant effect of reducing US oil imports by one- third. The US is within striking distance of importing zero oil from the Middle East if it chooses. The fall in natural gas prices — from nearly $14 per thousand cubic feet a few years ago to around $3 today — is rejuvenating American chemical and manufacturing industries, and lowering energy costs for consumers.

“President Obama has pursued a climate policy not dissimilar to his predecessor.”

Whereas the US thought ten years ago it would soon need to import natural gas to meet it needs, it is now facing the prospect of becoming a major exporter. Meanwhile, the spread of advanced drilling technology around the world has brought the popular “peak oil” hypothesis to disgrace. All of the recent projections, such as those of the International Energy Agency, now forecast that the age of hydrocarbon dominance (including coal) will last several decades

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longer than previously thought.

This hydrocarbon boom was completely unexpected and came as a surprise to Washington. In fact, had the political class and environmentalists known it was coming, they surely would have done something to stop it. It has been politically convenient for Obama to claim credit for the boom with the general public, even though it is occurring mostly on private and state-managed land rather than federal land. (The President’s bureaucracy continues to strangle or slow-walk permits for drilling on public land.)

But Obama has drunk so deeply of the anti-hydrocarbon Kool Aid that the hydrocarbon boom is a deep embarrassment at some level. He told more than one corporate CEO member of his private- sector jobs council (since abolished now that the election is safely behind him) that he has been assured by outgoing energy secretary Steven Chu that America is only a few short years away from completely replacing hydrocarbon energy sources and hence it did not need to be expanding conventional energy production. Word around Washington before the election was that Obama was telling environmentalists privately that he is fully committed to putting a price on carbon in his second term, and he made all the right noises in his second inaugural address and State of the Union speech to assuage environmentalists.

In his inaugural on January 21, Obama promised that “we will respond to the challenge of climate change”, and in the State of the Union a few weeks later he called for Congress to pass a cap-and- trade bill “like the one John McCain and Joe Lieberman worked on together a few years ago”. But cap-and-trade is not coming back, even if Democrats reclaim the House and hold the Senate in the 2014 elections. House Democrats never want to hear the phrase again; next to Obamacare, voting for the Waxman-Markey cap-and-trade bill was the most unpopular vote they cast in 2009, contributing

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significantly to their historic wipe-out in the 2010 midterm election. And the White House has specifically ruled out proposing the superior fallback position — a carbon tax — though it is possible Obama would gleefully accept one if Republicans proposed it as a part of a tax reform deal. Republicans may be the Stupid Party much of the time, but they aren’t completely suicidal. The likelihood of any climate legislation passing the Republican House is as remote as Republicans suddenly declaring their love for Obamacare.

So what options remain for Obama?

The President telegraphed his next moves in the State of the Union speech: “But if Congress won’t act soon to protect future generations ... I will direct my cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.” This formula is just a slight variation on the inaugural rhetoric of his primary presidential model, Franklin Roosevelt, who in his first inaugural address in 1933 said: “But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis — broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.” American liberals can’t resist appeals to expand executive power on behalf of the “moral equivalent of war”.

Obama went on to call for an “energy security trust”, funded with royalties from oil and gas production on public lands, to conduct research on next-generation energy sources, a reasonable idea that may nonetheless have been poisoned by the billions squandered already on green energy boondoggles like Solyndra. Obama or his

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new energy secretary Ernest Moniz will need to explain why this initiative will be any more effective than similar initiatives for breakthrough research by every president back to Richard Nixon. Since the 1970s, the federal government has spent nearly $200 billion (in current dollars) on energy research, but there have been few commercialised energy products for this effort. Why continue tilting at this windmill?

Speaking of windmills, Obama also called for continued subsidies for renewable energy, such as wind and solar power, currently running around $10 billion a year depending on how you sum up the complex patchwork of fiscal props. Renewable tax preferences and subsidies survived the “fiscal cliff” deal on January 1 — the work of some clever backroom dealing months ago by renewable energy lobbyists — but are likely to be scaled back or abandoned in the budget tightening that is going to take place in Washington over the next few years. The mandate to produce cellulosic ethanol (begun by President George W. Bush) has been a complete fiasco, and even environmentalists have turned on corn ethanol. But even if the subsidies are continued, the share of non-hydropower renewable energy remains pathetically small — stuck in the low single digits as a percentage of total US energy output.

Left unsaid in any of Obama’s grand pronouncements is the real action — regulation of greenhouse gases through the Environmental Protection Agency and the Clean Air Act. Understanding how this might work requires understanding a little about the arcane process of American administrative law that governs regulatory activity. US environmental statutes (and many other kinds too) delegate large amounts of discretion to the regulatory agencies to decide what concrete targets to meet and what policy means should be used to achieve those targets. But there’s a catch: the process is very slow, and broad rulemakings are usually challenged in court by industry or environmental groups, slowing down the process even further.

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It is not unusual for a major EPA rulemaking to take ten years or more from inception to conclusion, after which a long implementation period begins. For example, it took eight years for new ozone rules first proposed in 1997 to clear the procedural and legal hurdles to final adoption, and the proposed mercury emission rules that Obama delayed again last year have been in the works since the Clinton administration. Small wonder that even environmentalists regarded EPA regulation of greenhouse gases as the worst possible outcome for climate policy, and throughout the debate over the Waxman- Markey cap-and-trade bill in 2009, the prospect of having the EPA step in was used as a cudgel to intimidate opponents. That the EPA is now the main venue of climate action for Obama shows ironically how completely he and the environmental movement have been routed.

Can it work? The EPA typically wins these long, grind-it-out rulemaking fights in the end, chiefly because American administrative law grants generous presumption in the agency’s favour most of the time. That appears to be the case with EPA regulation of GHGs, too: in 2007, the Supreme Court ruled by a 5–4 vote that the EPA had the authority to regulate GHGs if it wants to under the 1990 Clean Air Act, even though Congress at the time opposed including GHGs in the text of the Act, and the mechanisms of a law designed for noxious conventional air pollutants is ill-suited for GHGs. (For example, a strict application of the Clean Air Act to GHGs could conceivably require an EPA permit for every fast food restaurant and apartment building in America — a paperwork nightmare the EPA itself estimated would require increasing its manpower tenfold.)

But even the Supreme Court’s green light doesn’t make it a slam- dunk for the EPA. Since this narrow win, the EPA has been slowly taking the necessary steps to introduce a regulatory regime for GHGs, but it isn’t going well. Last year the EPA announced proposed performance standards for new coal- and natural gas–fired power

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plants that would have the effect of making it impossible to build any new coal-fired plants in the future. And rules for new coal plants were just a precursor to new rules for existing coal plants that would slowly constrict the future of coal-fired electricity. Killing off coal, the highest emitting GHG energy source, is the number one object of the climate campaign, so the proposed rules were met with a frisson of excitement among climate enthusiasts when it was announced.

The trouble is that proposing an emissions standard that only natural gas plants could meet runs the risk of failing the one legal test the EPA might lose in court — that it is “arbitrary and capricious”. In April, at the last minute, the EPA withdrew the “final rule”, and will start over again. It declined to announce a new timetable for the revised regulations. But although the EPA usually wins regulatory fights in court, the Obama EPA has recently been losing in court, which suggests it has overstepped even its lenient bounds. For example, the agency recently lost a Clean Water Act case at the Supreme Court by a 9–0 vote, meaning even the Court’s liberal justices found the Obama administration’s position to be unreasonable. Someone at the White House has probably noticed this.

The basic problem for Obama and the climate campaign is that they are pushing uphill against public opinion as well as the basic economics of energy. The best public polls, such as Pew and Gallup, that ask the same questions year-on-year find public belief in catastrophic climate change continues to ebb. Pew’s annual issue poll continues to rank climate change last out of the 20 most important issues facing the nation. Obama has lately taken to quoting Abraham Lincoln’s famous remark that “public sentiment is everything. With public sentiment, nothing can fail; without it nothing can succeed.” This is a movement that has run completely out of gas, so to speak.

Substantial climate policy progress in the US was supposed to be the key to reviving the UN Kyoto process. Instead, the Kyoto Protocol

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has now expired without a successor, and its meagre results justify considering it to be the climate diplomacy equivalent of the Kellogg- Briand Pact that promised to end war back in 1928. Ironically, the unravelling of Kyoto shows that the Bush administration’s opposition kept it alive well past its sell-by date. As long as Bush was around to serve as the handy scapegoat, the UN climate circus could avoid facing its inherent problems. Quite unnoticed or unacknowledged by the climate campaign, the Obama administration has quietly embraced the diplomatic framework of the Bush administration. The main defect of Kyoto, as the Bush administration saw clearly, is that it omitted the fastest growing and now largest emitters of GHGs, especially China and India. Obama’s climate negotiators have quietly adopted the Bush administration’s “Asia-Pacific Partnership”, which the UN crowd and climate campaigners hated, and renamed it the “Major Economies Forum”. But without serious policy action from Washington, it is unlikely that rearranging the diplomatic deckchairs can save this sinking ship.

If you’d told environmentalists on election day in 2008 that more than four years later there would be no successor treaty to Kyoto, that a Democratic congress would not have enacted any meaningful —or even symbolic— climate legislation, and that domestic oil production would soar (even after a catastrophic offshore oil spill), they’d have suspected that Dick Cheney had stolen (another!) election. Yet environmentalists, who have tended to be the cheap dates of the Democratic Party for several decades, continue to plight their troth. Carl Pope, the recently retired executive director of the Sierra Club, has called Obama “the best environmental president since Theodore Roosevelt”. Yet if you look at the matter honestly, you’d have to conclude that it’s not just in national security policy where Obama has turned out to be the third term for George W. Bush. It turns out to be the case with climate policy as well. n

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China won’t weaken our close US security ties Don’t believe the media hype surrounding the Prime Minister’s visit to the People’s Republic

By John Lee

Julia Gillard’s first meeting with China’s new generation of leaders in April led to the conclusion of several agreements, including an annual Strategic Economic Dialogue between the Australian Prime Minister and the Chinese Premier Li Keqiang, future military-to-military exercises and port visits by Chinese warships, and a direct currency exchange deal. During and immediately after Gillard’s trip, China-based journalists such The Australian’s Sid Maher and the Australian Broadcasting Corporation’s Stephen McDonell labelled the visit a bilateral “breakthrough” that signalled the most significant development in Sino-Australian relations since Gough Whitlam recognised Communist China 40 years ago. Representing a rare Australian media consensus about the success and significance of the trip, Fairfax’s Mark Kenny labelled the agreements a “triumph” and “coup” for the Gillard government.

A domestic consensus by commentators that the visit represents a sea change in Australia’s relations with

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China is essentially driven by this argument: because Australia’s future belongs to a China-dominated Asia, its strategic ties with America will inevitably weaken. Indeed, China’s state-backed Global Times ran several editorials and opinion pieces arguing that the suite of agreements signed between Canberra and Beijing was a “big strategic victory” for China and indicated Australia was finally recognising that it needed to take a more “balanced” strategic approach by moving away from Washington and gradually towards Beijing.

But although the agreements are significant, they hardly represent any such developments. They neither represent a sea change or turning point (for the better) in Australia’s relationship with Beijing. The visit also provides scant evidence that China’s economic and strategic leverage is inexorably strengthening, and that it has scored a strategic victory at America’s expense by forcibly pushing Australia one step further away from Washington’s embrace. Instead, it is the normal stuff of a growing engagement with a major trading partner that is neither surprising nor groundbreaking. A few deep breaths, and skepticism of a narrative that sees every announcement with China as a historical turning point for Australia, is the more sensible interpretation of events from early April.

The Prime Minister used the term “strategic partnership” to describe the enhanced relationship while China’s President Xi Jinping indicated that the bilateral relationship had been taken to a “new level”. Prima facie, the rhetoric appears justified. China has only formalised an annual dialogue involving its Premier with a handful of players in the US, Russia, Germany, the UK and the European Union. Australia is the first regional country (if we exclude Russia) to have this formal arrangement with China. Although the structure of the future Dialogue remains unclear, it is likely to also allow the Australian treasurer and foreign minister to meet with senior Chinese counterparts in an additional formalised exchange. The currency deal

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which allows Australian dollars to be exchanged directly for Chinese renminbi, and vice versa, is only the third currency afforded this privilege after the American dollar and Japanese yen. And discussion about closer military-to-military links with the People’s Liberation Army in the form of live firing exercises and exchanges clearly goes further and deeper than anything the Australian Defence Force has ever initiated with the PLA.

Let’s begin with the Strategic Economic Dialogue. It is noteworthy that the annual leader’s meeting is between the Australian Prime Minister and the Chinese Premier, not the latter’s President. Although Premier Li Keqiang has a lead role in economic policy and execution, it is the Chinese President Xi that sits atop the all-powerful Standing Committee of the Politburo, the country’s peak political decision- making body. It is also President Xi, and not the Premier Li, who is the country’s commander-in-chief and Chair of the Central Military Commission (China’s peak military-decision making body). The point is that the Australian Prime Minister has an annual audience with China’s second, and not the most, powerful political leader.

Moreover, the fact that Beijing offered up the Premier rather than its president indicates that China intends to pursue a largely transactional relationship with Australia that is focused on trade and other economic issues. The currency deal which will lower hedging and transaction costs of trade is consistent with this interpretation. The excluding of difficult strategic and defence differences from the normal agenda is hardly indication of a genuinely comprehensive strategic partnership evolving between the two sides.

As far as the leader’s meeting is concerned, the early indication is that China will use it to push for the lowering of Australian regulatory oversight and restrictions placed upon Chinese foreign direct investment in sectors such as mining, agriculture, and telecommunications. Australia will want to discuss ways of attracting

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even more Chinese students and tourists into the country. Canberra will also want greater access to the Chinese domestic services market for Australian firms. This is all evidence of a greater desire by both sides to enhance win-win economic cooperation where possible, and to further the economic interests of the country and its corporate firms — no more and no less.

The Chinese have used the same approach of a Dialogue led by its premier to argue for the watering down and eventual elimination of high-technology export controls imposed by the advanced American and European economies against China. It also uses the Dialogues to voice its interests and concerns as a major holder of American dollar and Euro-denominated bonds and other fixed-income assets. Advanced Western economies use the Dialogues to press China on removing obstacles to its domestic markets, improve intellectually property protection, and to increasingly demand action against Chinese entities engaged in cyber espionage.

The point is that these Dialogues are entered into by China and its major trading partners to assert and defend their economic interests. They take place not just because the economies of the countries are important to each other but also because there are enduring and possibly intractable economic differences and disagreements. And as for the strategic significance of holding these economic dialogues with China, one could hardly argue that America, Germany, Britain, and the EU as a whole are drifting closer to China’s strategic orbit, and at each other’s expense. It would therefore appear strange to apply a different logic to Australia’s Strategic Economic Dialogue with China.

Bear in mind that the side meetings between the Australian treasurer and foreign affairs minister with Chinese counterparts is also less than it seems. As The Australian’s foreign editor Greg Sheridan points out, the treasurer will not meet the vice-premier in

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charge of economic policy but the chairman of China’s National Development and Reform Commission. The foreign minister will not meet the Chinese state councillor in charge of foreign affairs, who is the real political decision-maker, but the Chinese “foreign minister”, who is more akin to a chief bureaucrat of the ministry. In summary, Australian ministers will not be formally meeting Chinese counterparts with similar decision-making powers and policy authority.

The error of exaggerating the substance of the recent agreements between Australia and China is one thing. The tendency to begin with the assumption that China’s strategic and economic hand is irresistible and will soon overwhelm Australia and the region is something broader and deeper afflicting many Australian and regional commentators. The latter error is largely behind the overreach in commentaries when it comes to claims that the past fortnight represents a huge strategic victory for China at America’s expense.

The stubborn narrative that China is systematically shifting Asia’s strategic orientation away from America and towards itself flies in the face of ongoing regional reality. Since his confirmation as China’s president, Xi has pledged to “strengthen” military cooperation with Russia, advance a “new type” of strategic and military relationship with America and India, vowed to “boost” military ties with Malaysia and Indonesia, and most recently voiced a desire for a “comprehensive partnership” with Australia. This is widely interpreted as evidence of China’s growing clout. It appears to escape many China watchers and Asia hands in Australia and the region that China’s recent charm offensive is as much a product of its weaknesses and vulnerabilities as its strength.

Beijing is well aware that despite its economic importance, it is rising as an extremely lonely strategic power alongside a wary region.

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China has become the largest trading partner of Japan, South Korea, India, Australia, and many of the ASEAN countries. At the same time, all of these countries are balancing and hedging against the prospect that China’s rise will not be peaceful by reaffirming, reinforcing, or else developing closer political, strategic and military ties with America, and in many cases, with each other. Even Vietnam is publically appealing for an even greater American military presence in the South China Sea — a scenario that could not have been imagined several decades ago. This is driven by the long-standing grand strategy in every major regional capital to balance against the prospect of dominance by another Asian great power.

“China’s recent charm offensive is as much a product of its weaknesses and vulnerabilities as its strength.”

Since China’s defence budget has been growing at rates in excess of its GDP increase every year for the past 15, there are few who believe that Beijing’s military is designed only to prevent Taiwanese independence, as its official justification goes. China already unofficially spends almost three times more than Japan on defence. Despite the sound logic that China needs a peaceful and stable environment within which to continue its economic growth, Beijing seems to be less prepared to compromise over claims in the East and South China Seas now than it was a decade ago.

All these reasons give the major regional maritime capitals a powerful incentive to remain wary of China’s rise. It also explains the regional enthusiasm for Japan, South Korea, Australia, and Singapore reaffirming and upgrading their strategic and military cooperation with the United States. Despite the emergence of China as Asia’s

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central trading hub, no major capital has “chosen” China in strategic terms over America — thereby minimising any pressure on Australia to do so. This makes the argument that recent events signal the beginning of Australia’s inevitable strategic drift toward China even more difficult to sustain.

Finally, the logic that increasing trade with China will sooner or later force regional states into the Chinese strategic orbit assumes that deepening trade with China will always significantly increase Beijing’s strategic leverage. For small and weak countries with poor economic prospects such as Cambodia, Chinese leverage is indeed considerable. But for diversified trading economies such as Australia, Japan, South Korea, and many of the other ASEAN countries, increased trade with China is not proving strategically decisive. In other words, even as trade between China and these countries has increased, there is little evidence that Beijing’s strategic leverage has strengthened over these capitals.

Part of the reason for this seeming anomaly is that over two thirds of regional trade with China is processing trade, with the majority of end products being shipped to America and the EU markets. It is net demand that ultimately creates manufacturing and services jobs for Asian firms. The domestic consumption market in America and the EU are both about US$11 trillion in size, compared to a Chinese domestic consumption market of US$2.5 trillion. Additionally, the most lucrative sectors of the Chinese domestic market remain largely closed to foreign firms. The bottom line is that while China remains the more exciting market with growth potential, the Western consumer is far more important to Asian firms and will remain so for decades.

For Australia, commodities comprise the majority of exports to China. Even as political and diplomatic relations between the two countries reached a generational low under former prime minister Kevin Rudd’s government from 2009–2010, Australian exports to

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China grew impressively. The lesson here is that China buys Australian resources because it needs to. Beijing has limited scope to either reward or punish Australian commodity suppliers for the strategic policies of our government.

There would be little concern in Washington over Gillard’s visit to Beijing or with the agreements signed during the meetings. China is now Asia’s most formidable great power. But overestimating Chinese strengths, and underestimating its vulnerabilities, leads to inaccurate commentary and, even more seriously, poor policy. n

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Marshall Green: America’s Mr Asia The career of a distinguished US diplomat during the Cold War has lessons for America’s place in the region today

By James Curran

Not long after his arrival in Jakarta in 1965 as the freshly minted American Ambassador to Indonesia, Marshall Green was the guest of honour at a diplomatic reception hosted by President Sukarno. In the preceding years, the Indonesian leader had ramped up his nationalist rhetoric, diverting attention from a struggling economy in an effort to try to hold a far-flung and fractious political community together. Most alarmingly for Western observers was the growing power of the Indonesian Communist Party, then the third largest outside Moscow and Peking. Sukarno had succeeded in his demands to have the former Dutch territory of West New Guinea returned to Indonesia and had then embarked on a hostile policy of confrontation towards the new Malaysian Federation, believing it to be a neo- imperialist plot to encircle Indonesia. He had also called for a Peking–Jakarta axis, a move that had Washington, and Canberra, even more alarmed.

Green’s remarks for the occasion had been carefully

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prepared in Washington and necessarily tried to keep a somewhat restrained focus on the positives in the relationship. After the speech, Sukarno stepped forward and “delivered a terrific blast against American foreign policy”. Although tempted to leave the room, Green decided to stay, and was then introduced to the leading guests. One, a senior Indonesian Foreign Office official, Madame Supeni, was reputedly one of the president’s many mistresses. Green saw his chance to return fire at Sukarno, a nearby microphone carrying his riposte to the rest of the room. “Madame Supeni”, he gushed, “It’s a great pleasure to meet you. You know with that beautiful raven hair and flashing eyes and green sari I really couldn’t keep my mind on what the president was saying in his recent remarks. Could you tell me what he said?” After a deadly silence, Sukarno slapped his thigh and laughed uproariously, causing the entire diplomatic congregation to emit a prolonged sigh of relief.

One of America’s most gifted Asia experts and policymakers in the post-war period, Marshall Green prided himself on his quick wit and gift for comic repartee. His diplomatic memoirs even bore the subtitle “Recollections and humor” and featured countless episodes where his jokes, as a State Department colleague once recalled, were able to “relieve awkward tension, induce a more friendly mood between opposing negotiators, or cut through windy rhetoric”.

There can be no question that Green found a kind of boyish joy in reaching for the nearest pun. But humour might also have been a way of releasing the pressure. After all, his was a diplomatic career spent almost entirely at the coalface of America’s Asia policy from the beginning of the Second World War to the late 1970s. This was a period of extraordinary transformation in the region, in which the assertion of newfound nationalism jostled with chronic poverty and rapid economic development. Green was uniquely placed to observe the way in which these two forces, national self-assertion and modernisation, were shaping a new dynamic in East Asia. As the

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author of the background brief which informed the Nixon doctrine emphasising limits to American power, and a key player in the remaking of US China policy, his career offers scholars a unique insight into how Washington negotiated the transition from the rigid, ideological bipolarity of the Cold War to the new, more fluid world that emerged in the early 1970s. Along the way, he himself underwent something of a transformation, from staunch advocate of a Pax Americana to open skeptic about the reach and range of Washington’s power.

Being present at so many regional flashpoints meant that Green acquired something of a reputation as an Asian “trouble shooter”. During the Taiwan Strait conflict in 1958, he served as crisis manager for secretary of state John Foster Dulles; as deputy head of mission in Korea in 1960–61 he observed the students uprising and the downfall of South Korean president Syngman Rhee, followed by a military coup d’état which overthrew a democratically elected government and installed President Park Chung-hee. And as consul general in Hong Kong — when that mission was the administration’s “eyes and ears” on China — Green witnessed the tragic aftermath of the Great Leap Forward when thousands of Chinese refugees swarmed into Hong Kong.

In the early 1960s, he was recalled to Washington to lead a review of American China policy, where he recommended the easing of trade and travel restrictions. In Indonesia, his first posting as ambassador, Green watched as Sukarno and his pro-communist followers were replaced by Suharto, who made it clear that foreign investment would be welcomed and a more cooperative stance with regional partners adopted. Green then served as assistant secretary of state for East Asia and Pacific affairs from 1969 to 1973, a period which saw the return of Okinawa to Japan, the bombing of North Vietnam, the Paris Peace Accords and Richard Nixon’s trip to Peking. And he was ambassador in Australia when the relationship, as one American

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official put it at the time, was “seriously out of whack”.

There was nothing in Green’s background or education that had prepared him for his long service in East Asia. Throughout his education he had no exposure to Asian languages or cultures. A self professed “little New Englander”, he often spent his summer holidays as a child travelling with his parents in Europe.

Educated at the prestigious Groton school and then Yale, his first career break came in October 1939 when the US ambassador to Japan, Joseph Grew, needed a private secretary. Green got the job, and a lifelong fascination with the country began. As he watched the storm clouds gather in North-East Asia, Green confessed to be “spoiling” to go to war with Japan. He travelled through Japanese occupied Korea, Manchuria, and northern China, seeing first hand the “ruthlessness of Japanese military rule”. The experience also forced him to think about the prevailing mood in his own country. Writing to his mother around this time, Green deplored the isolationist strain in the US debate. Americans had become “over humoured by the good fortune to which we have fallen heir. Where the youth of other lands are aggressive, we are retracting, and our doom, like that of the Greek and Roman civilisations, is sealed when we produce, in our declining years, men not willing to fight for what they have.” Green left Japan in May 1941 and joined the war effort, serving for the duration in the US Navy as an intelligence officer and, after learning Japanese, as an interpreter.

Entering the foreign service proper after World War II, Green’s first posting was as third secretary to Wellington, New Zealand, where despite an appreciation for America’s assistance in the Pacific War, he noted the strong pull of local sentiment back towards the “mother country”, especially in the form of bulk exports of primary products to a “hard-pressed England”.

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But it was Japan that had profoundly influenced Green: the country was to become a self-declared “thread” throughout his career. In 1948, secretary of state George Marshall sent George Kennan, then head of policy planning in the state department, on a special mission to Japan, along with Green as his sole travelling companion and adviser. The visit resulted in the acceleration of the US government’s shift in emphasis from occupation to economic recovery. The idea, Green said, was to “normalise things as far and as fast as one could to stave off growing, nationalist resentment against the occupation”. Green described listening to Kennan’s briefings as like seeing a “human eye ... piercing into the depths of eternity”. Kennan had also taken issue with the policy of routinely “purging” those sections of the Japanese business or political elite who had been in any way responsible for the war effort, arguing that each case should be dealt with individually.

Out of that experience came a central lesson that was to guide much of Green’s own approach to the rise of Asian nationalism: there was a need for the US to help its regional allies stand on their own two feet and take care of themselves. Later, he was intimately involved in preparing the recommendations for a mutual security treaty with Japan and in the negotiations relating to the ongoing presence of American bases there. Here too Green saw how the prickliness of domestic politics could wreak their own havoc on close alliance relationships. A “vociferous” left in Japan had “whipped the people up on the military base issue”. In the late 1950s he accompanied Frank Nash, assistant secretary of defence, on the far eastern leg of a presidential mission to examine the issue of relations between US military bases and their host communities.

Despite these sensitivities to local issues, Green nevertheless was a creature of his culture, and prone to keeping faith with the prevailing Cold War orthodoxies. Had Indonesia gone communist, he believed, “all South-East Asia might have come under Communist domination.”

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With American forces in Vietnam, he argued that had Suharto not prevailed and the communists taken Indonesia, US troops “would have been caught in a kind of huge nutcracker”: squeezed between communist insurgencies in north and South-East Asia. In Green’s view, however, Indonesia became something of a model, showing that Asian solutions could solve Asian problems. Or, as he put it to Nixon some years later, Indonesia showed how “traditionalism and emotional nationalism” could give way to “modernisation and productive relationships with other countries.” Green emerged from that posting convinced that a much lighter American footprint in Asia was required, along with an acceptance that the US could not control every situation.

As ambassador in Jakarta, Green had made a favourable impression on Nixon, and the two had discussed regional affairs at length during Nixon’s visit there in 1967 as he geared up for another tilt at the presidency. Once elected, the new president appointed Green as assistant secretary of state for East Asia, and immediately dispatched him to all corners of the region to take soundings from key allies. He was given a wide brief: in effect to give content to Nixon’s ideas — first expressed in Foreign Affairs in October 1967 — about what a post-Vietnam Asia might look like. Green’s report following that mission observed that “our ability to help will depend to an important extent upon what countries of the area are doing to help themselves and their neighbours.”

But there was no regional clamour for the US to leave, Green noting that “virtually all East Asian leaders stressed that premature or excessive withdrawal of US strength could prove disastrous.” Yet in a climate of worsening news from Vietnam and growing public disillusionment in America, Green’s message found its mark. As he wrote:

Americans feel that they are carrying a disproportionate share

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of the burden for military security ... in areas which, while important to the US, are nevertheless distant. They are asking more and more frequently what other countries are doing to help themselves and to help each other. This mood is intensified by concern over our deepening problems at home’.

Green had set out the basic parameters of what would come to be known as the Nixon doctrine — pronounced by the president on the tiny Pacific island of Guam in late July 1969. That statement affirmed that the US would not get involved in another land war in Asia and, moreover, that its regional allies had to provide more for their own self-defence. Treaty commitments would be maintained, but the implications were clear: future American involvement in the region would be of a different order. In essence, the statement on Guam was a signal that the US was abandoning the worldwide struggle against communism. Washington could no longer be the world’s policeman, and American power was beyond its prime.

Culling some Cold War shibboleths was part and parcel of this adjustment. In a private address to American chiefs of mission in Asia around the same time, Nixon himself confided that “the way the war ends in Vietnam will have an enduring impact on events, although the domino concept is not necessarily valid.” What concerned him the most was the feeling that “we should get out of Asia at all costs”, a temptation he rejected. He feared an “escalation of not just get-out- of-Vietnam sentiment but-get-of the-world sentiment. And this would be disastrous.” The key issue, he stressed, was “how to overcome US disenchantment with Vietnam and growing doubts about our involvement in the world.”

Nixon was feeling his way towards a new way of speaking about America’s role, one that was less prone to singing the praises of US pre-eminence and predominance. In something of a rare clarion call to the diplomatic corps, he added: “If I were in the foreign service, I

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would choose Asia to serve in ... In Asia you have more opportunity to shape the outcome of events than anywhere else on this globe.”

The Nixon doctrine was all the more alarming to Australian leaders because without the presence of US troops on the ground in South-East Asia, Australia was back to where it had been prior to the Vietnam war: namely profoundly uncertain about what kind of protection the ANZUS security treaty afforded it. Yet Green also saw Australia as something of an exemplar for other regional allies. “The new sense of vigour in Australia” he told secretary of state William Rogers in 1972, “can be used to advantage in utilising Australia’s leadership to strengthen regional cohesion and self-help as visualised in the Nixon doctrine.” And this too was how Australian Labor Party leader Gough Whitlam had interpreted the American statement, seeing it as an opportunity for Australia to shed the “stultifying” rigidities of the Cold War and define a more independent role for the nation within and without the US alliance.

“The election of the Whitlam government witnessed a rapid and dramatic deterioration in the alliance relationship.”

And yet the election of the Whitlam government witnessed a rapid and dramatic deterioration in the alliance relationship, typified by the strident criticism by senior Labor ministers of the December 1972 Christmas bombings, but also on account of the fact that Whitlam pulled out the remaining military advisers from Vietnam and threatened to abandon the South-East Asia Treaty Organization. According to Green, Nixon apparently felt as if “our great, staunch ally had opted out of the war.” At the time, Australia was reported to

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be second only to Sweden on Nixon’s so-called “shit-list”, and the president ordered that nobody at the rank of assistant secretary or above could meet with any Australian officials, including the ambassador, then Sir James Plimsoll. It is important to recall that American national security officials in this period were prone to label Australian public statements on foreign policy as “gaffes” or “monstrosities”. Green circumvented Nixon’s ban by visiting Plimsoll at his own house.

Some Australians treated Green’s appointment as the new American ambassador in early 1973 as something of a “trophy”. ”We got Marshall Green” was the boast of one official in the foreign affairs department: more used, no doubt, to the usual roll call of presidential associates and bag handlers that normally secured the Australian post. Others saw it as an “early pay off from Australia’s changed attitude towards the US.”

But another explanation is more convincing. Green and Nixon’s national security adviser, Henry Kissinger, did not always see eye to eye. Green’s opposition to the idea of a US ground invasion of Cambodia in 1970 hardly helped his cause. Originally thought to be the next logical appointment as ambassador in Japan, Green was instead sent to handle the Australian problem. The tension between these two policymakers clearly lingered. In an oral history interview in 1995, Green remarked that Kissinger had no “depth of knowledge about East Asia — none” and that “his failure to draw upon the expertise of people who had spent their lives working on East Asia was a great mistake on his part.” He recalled that being “cut out of things” was particularly problematic: “Kissinger knew that you didn’t have the complete picture, and therefore he tended to discredit your views accordingly.” Whitlam believed that “Kissinger resented Green’s professional expertise and verbal brilliance”, contending that the appointment was to remove the diplomat as another source of advice to Nixon. Although Green made all the right noises when he arrived

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in Australia about having specifically chosen the Canberra post for himself, within two months he was in Kissinger’s office in the White House requesting that he be reassigned back to Washington.

Green’s plea to come home reflected in part the fact that he had so quickly mended a somewhat rickety alliance fence. First, he had secured Whitlam a much-prized invitation to see Nixon, after the president had for five months steadfastly refused to open the Oval Office to the Labor leader. Moreover, Green had assuaged Whitlam’s concerns about the purpose and function of American bases in Australia. A series of disputes and divergences over Asia policy continued to rile relations. In essence, though, Green kept faith with the policy he had recommended in the late 1960s, namely that Washington and Canberra need not necessarily march together “in lock-step, against the forces of darkness”.

That in itself confirmed Green’s acceptance — as it had for Nixon — that the turning away from certain Cold war orthodoxies necessarily involved toning down the grandiloquent rhetoric and missions of the past. With the changing circumstances, there could be no more lofty rhetoric about an American century. During his tenure as ambassador in Australia, Green even pointedly rejected the notion, as expressed in John F. Kennedy’s inaugural address, that America had a special mission to promote freedom across the globe. Green confessed that it was “hard to conceive of a more sweeping declaration of commitment to the world spoken by a president just elected by the narrowest of margins.” While Americans would

...still wish to carry out the burden of this message ... we have come to see a serious flaw in an approach that suggests the business of America is world leadership. Leadership is to be shared. Burdens and responsibilities are to be shared ... it is far beyond the means and capabilities of any one country to shoulder all these responsibilities; and it is far beyond the

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wisdom of any one country to supply by itself the answers and solutions to world problems.

That too had consequences for alliance partners. By the end of his posting in 1975, Green had declared publicly that Harold Holt’s policy of “All the way with LBJ” was a “downright embarrassment” to Australia. But to the very end, he was ever the analyst, opining to the British High Commissioner in October 1974 that the Whitlam government had “from six months to a year” before it would fall, since it had no policy to combat inflation. Although he believed a successor Liberal–Country party government would be no more successful in this regard, he wondered whether it “would open the way to a much more extreme Labor government thereafter”. It showed how much the Whitlam experience had stung the American diplomatic mind.

Writing confidentially to Kissinger in July 1975, Green summarised in one sentence the essence of the policy dilemma he had encountered over the previous two years: “one of our biggest problems in Australia”, he mused, was “complacency. Paradoxically, the Indochina debacle, inflation, and unemployment have helped make Australians increasingly aware of their dependence on outside developments and of their reliance upon the United States.” The Whitlam government had “providentially matured in its views.” But this too spoke to a certain American misreading of Whitlam and his intentions. It showed that America’s encouragement of national self-reliance in Asia had its own limits. Whitlam never advocated the abrogation of the alliance, yet so many in Washington saw his policies as a dangerous flirtation with neutrality, if not flippant anti-Americanism.

What guidance, then, can Marshall Green offer in today’s flammable world of north-east Asian affairs? Former national security advisor Zbigniew Brzezinski noted recently that the media’s depiction of Obama’s rebalancing of American foreign policy towards Asia as a

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“pivot” (with the salient reminder that the President himself has never used the word) misses the point that it was “only meant to be a constructive reaffirmation of the unchanged reality that the US is both a Pacific and Atlantic power.” That might be so, but few would quibble that the challenges facing policymakers in Washington and Canberra arising from the rise of China present challenges of a different order to those the US has faced in the past. And the White House still faces an equally formidable set of regional flashpoints — not least with North Korean sabre rattling, persistent Sino-Japanese antagonism, and lingering India–Pakistan tensions. Moreover, the psychological and political effects of modernisation, and their resulting consequences for nationalism, are still very much at play across Asia.

Green saw both sides of this problem: that just as much as this new spirit of national self-confidence could be a force for cohesion, the divisive nationalism of Asian leaders like Mao, Rhee, and Sukarno could also be employed to brutally consolidate power at home while making enemies abroad.

At a critical time in American foreign relations, Marshall Green recognised that the best role the US could play in Asia was not that of roving policeman, but stabiliser. It is a role many regional allies look to Washington to play today, despite the message now, as then, that America needs first and foremost to tend to pressing domestic challenges. Of course, no one bureaucratic career, speech, or presidential doctrine from the past can point a sure way ahead: history has a habit of springing surprises. But the path can surely be illuminated by a surer grasp of the history of America’s regional embrace in the post-war era and those who crafted its course. n

American 65 Review BookREVIEWS Reviewed by Ramesh Thakur

A global lesson for the West

Kishore Mahbubani shows once again why he is one of the world’s leading thinkers

Australians have rarely had it so good, yet rarely felt so angry with and alienated from their polity. Kishore Mahbubani, a distinguished scholar and former diplomat from Singapore, explores the same paradox at the global level. Perhaps the explanation lies in Westerners feeling uncomfortable that the others are catching up to them materially, copying their values and aspirations, and demanding a fair go in the dominant language of the West for the past two centuries. A fair go for the rest will mean a lot less of everything to The Great Convergence: Asia, the West, go around for the 12 per cent of the and the Logic of One World West. by Kishore Mahbubani PublicAffairs, 2013

While reading this book, I was constantly jogged by memories of a typical rent-a-crowd anti-American demonstration in Kolkata. One young man held aloft a placard that boldly proclaimed “Yankee Go Home! And Take Me with You”.

Mahbubani’s story is the story of Singapore, which represents the success of Asia since the retreat of European colonialism. He recounts how some of his earlier books and newspaper columns have earned

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him a reputation as an anti-American polemicist. If Mahbubani appears anti-Western to some, they really have no idea of what some of the rest think about them, and we are in even deeper trouble in reordering the world on a new equilibrium between the West and the rest. It is past time for many leading Western public intellectuals (and leaders) to listen, not just preach — and preach more loudly if their message is not being well received — and learn to distinguish friend from foe, tough love from hostility. Asking if Americans are ready to accept their nation as number two may be premature. But it is hardly hostile.

Mahbubani is generous to a fault in acknowledging the many progressive moral, intellectual, and material contributions that the West has made to the rest’s wellbeing. But he is critical of many of its policies, especially US policies, and it is difficult to quarrel overall with his core claim that the minority West must find some accommodation with the 88 per cent majority rest based on common principles and the equal moral worth of all human beings.

There is no doubt that Mahbubani comes to this task as a friend of the West. His basic thesis is simple enough, but the simplicity with which it is expressed conceals one of the most astute and sophisticated men of the world I know. He may be an optimist, but he certainly is not naïve. The rest of the world is converging increasingly with the West in average income on the backs of a burgeoning middle class. This rapidly expanding middle class takes its major lifestyle cues from the Western middle class, producing a parallel convergence in values and aspirations. This is reflected in and assisted by the march of globalisation, technology and the growing numbers from the rest who are educated in the best institutions of the West.

The analysis proceeds smoothly, using a pleasing blend of serious scholarly research, personal anecdotes, and telling metaphors drawn with ease and facility from Mahbubani’s experiences in the UN, Davos, and other forums and venues.

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Mahbubani develops his thesis with the help of a maritime analogy. The world’s 193 countries are passengers aboard a ship that has no captain or crew. Instead, each nation’s cabin has its own captain. Only when storms or other disasters strike do we ask if we should choose a skipper to take us safely through that particular crisis and then return to business as usual. Little wonder that the journey is rough and risky: the destination unknown and uncertain. This is especially so because the world must navigate its way through several dangerous fault lines, none more so than the divide between the West and Islam.

“The rest of the world is converging increasingly with the West in average income on the backs of a burgeoning middle class.”

Mahbubani’s insights on the China–US and China–India dyadic relationships are among the best and most original contributions of the book, although I would be considerably more circumspect about India’s prospects: it has an unmatched capacity to look opportunity firmly in the eye, turn around, and walk off resolutely in the opposite direction. Maybe just a hint of caution on China too might be in order.

The accelerating convergence heightens the urgency of the need for redressing global governance deficits. The Western-sourced middle class values mean that the principles on which such governance advances must be built are democracy, power sharing, equity, and accountability — as well as geopolitical realignments. But the West is proving singularly reluctant and obdurate in exporting democratic structures and procedures to international governance institutions, to ceding power in order to share it, to assuming equitable costs of managing the global commons, and, in general, to support a universal rules-based

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order in which one law applies to all.

Take the cosy arrangement by which Europe and the US have monopolised the leadership of the International Monetary Fund and the World Bank respectively. The chutzpah with which the current leaders of these two institutions were chosen was indeed breathtaking. Or take the United Nations system. Mahbubani spent two stints as ambassador to the UN, including two years on the Security Council. His observations on the great-power machinations that keep the UN intentionally weak and ineffectual might seem unduly cynical. All I can say as a former senior UN official is they resonate powerfully with me.

Mahbubani argues that the major powers cannot tolerate any international organisation that is both independent and powerful, and have a common interest in choosing a Secretary-General who is pliant and duly respectful, not independent-minded, bold, and visionary. A couple of times in the past they’ve mistakenly chosen the latter type.

His iconoclasm extends to attacking a number of other Western sacred cows, including foreign aid and sanctions as tools of foreign policy (dressed up in the language of charity and the international interest, they are either tools to control and manipulate others or disguised subsides to globally uncompetitive national industries), and to the Organisation for Economic Co-operation and Development. Turning the tables on UN bashers, he argues that while the UN should be reformed under new management (keep the vehicle, change the driver, in Ban Ki-moon’s metaphor), the OECD should be shuttered.

While the book’s overall thesis is persuasive, I am less convinced than Mahbubani that the forces driving the world towards convergence are irreversible. It is useful to remember the many good news stories on peace and prosperity: we humans have never been healthier, wealthier, better educated, and more at peace than today. Even so, the relentlessly optimistic message downplays the dark side of globalisation,

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where elements of uncivil society have exploited the absence, retreat, and weakness of state structures to engage in drug, arms, and people trafficking. Prices have equalised rather faster than wages. Income inequality has worsened both within and between states. The Association of Southeast Asian Nations’ virtues are also exaggerated. Yes, it has been helpful and useful, especially for the smaller states. But even Asia’s major powers have not been shy of using it competitively against one another. And I managed to check my enthusiasm for the likes of Tony Blair years ago.

The book’s main arguments will be broadly familiar, uncontroversial, and, indeed, unremarkable to those from the rest, although they will welcome the persuasiveness with which the thesis is articulated and the evidence produced to substantiate it. Its primary audience and those who will benefit most from reading it is the opinion elite in the West. For Mahbubani is, at heart, a sympathetic chronicler of what ails the world and how it might be made better for all of us by being re-made in the image of essentially Western values and institutions. If his message is found to be harsh, unsettling, and uncharitable in Western capitals, we may yet sleepwalk into global disasters that can and should, with prudent foresight and a mutual generosity of spirit, be avoided. n

American 70 Review BookREVIEWS Reviewed by Gregory Melleuish

Burke’s lessons for today’s conservatives

American conservatives have little to gain by reverting to 18th century principles

There is a certain oddity about this book. It preaches a doctrine of political moderation and festina lente founded on a consideration of the works of Edmund Burke and The Federalist. To my mind, such a doctrine makes a lot of sense when “things ain’t broke” and one can advance into the future with a fairly sure sense that a major crisis does not wait around the next corner. Such a presumption does not appear to be true of any Western country at the present point of time. Not only do they face the immediate hazard of massive debt and a Constitutional Government: seeming inability to reduce it, they also Liberty, Self-Government and look forward to even more challenging Political Moderation circumstances as ever more demands by Peter Berkowitz Hoover Institution Press, 2013 will be made on the state, not least in such areas as an ageing population and health.

If the present era demands anything, then surely it is the enunciation of firm principles that will enable the Western democracies to navigate the problems, not only of the moment, but those with which they will have to deal, and solve, over the next thirty years. Berkowitz’s book

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would appear to be a response to the current political situation in America, in which it appears to be very difficult to get a Congress holding one set of political principles, and a president holding another, to work together for the common good.

There is, using the terminology of late 17th century England, the “rage of party”, in which what look like two irreconcilable sides seem to be at each other’s throats. As Mark Knights has demonstrated, one of the major consequences of that rage was the demand for a more civil and polite politics, such as was exemplified inThe Spectator, but the reality was that the rage only subsided with the accession to the throne of George I and the complete triumph of the Whigs. As we shall see, this is extremely important for understanding Burke.

Berkowitz might also have benefitted by reading another great republican writer Niccolò Machiavelli:

The normal legal procedures of republics are very slow, since no council or official can do anything independently, but each one must for many things have the approval of another; in reconciling their various opinions time is lost. Because of this delay, their provisions are very dangerous when they must provide against something that does not permit loss of time.

Unlike the Roman republic, there is no provision for a Cincinnatus to be summoned to save the day in a modern republic. Modern republics have to live with their normal legal procedures. It is worth noting that as time passed the Romans had less and less recourse to the use of a dictator because they were able to harness the competitive instincts of their aristocrats for the public good.

Berkowitz invokes Burke as the model of moderation who supported reform in the cases of India, America, and Ireland, but who baulked at the revolutionary tactics adopted in France. There is a great

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deal of truth in this picture of Burke but it must also be remembered that Burke was a Whig and an heir to the revolutionary settlement of 1688. He lived at a time when Toryism in its old sense had largely ceased to exist; no one wanted a Stuart revival or a return to the world that existed before 1688.

In his Appeal from the New to the Old Whigs Burke continued in this tradition of playing down the revolutionary consequences of 1688. He emphasised continuity when there was real change; he turns the radical Whigs of 1710 into conservatives. The Glorious Revolution was part of a radical transformation of the British state, creating a system that combined parliamentary government, bureaucracy, and new financial instruments such as the national debt and the Bank of England. But to listen to Burke, one would think that it was a simple and smooth transition that simply restored the Ancient Constitution. The idea that the Glorious Revolution was not a revolution was a crucial element in building consensus in 18th century Britain.

There is a smell of hypocrisy about his characterisation of the French Revolution. The French state was broke, largely as a result of its wars with Britain. Yes, it went too far in its attempts to wipe out the past and start anew, but to say that France could build on its existing institutions when it was essentially a failed state is hardly useful practical advice. The political and constitutional changes proposed by the revolutionary politicians were in line with what would have been considered the best practice of the day. What really fouled the water was the attempt to solve France’s financial woes by effectively appropriating the property of the Church, which led to deep and irreconcilable divisions between republicans and Catholics.

Of course, the American case was very different. Burke’s arguments made sense in a place which was British and where individuals could appeal to their rights as the heirs of the British Constitution. The wars with France did stretch the British state but it was far from broken. It

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was a lack of political prudence and an inability moderate that led the British into disaster in America in the years between 1763 and 1776.

There are certain similarities in the cases of The Federalist and Burke. There was a certain consensus in post revolutionary America because many of those who disagreed, the Loyalists, departed for other places. The rage of party had largely been solved. The Federalist argued for a moderate form of republicanism which triumphed in the American Constitution. That triumph most certainly did not see the end of political conflict in America, but at least Christianity was in accord with the Constitution and became a bulwark of democracy.

Burke and the authors of The Federalist operated within a largely consensual framework and this enabled them to be moderate. Moreover they lived in societies in which the capacity of government was far less developed than it is today.

The biggest issue of the contemporary world is the ever-expanding size of the state and the brick wall towards which we are all heading as populations age and the capacity of the state to pay for all that is expected of it declines. The reality is that America and the West are facing circumstances never before seen in human history. It is ironic, but not unexpected, that, at a time when consensus is virtually a necessity, the rage of party has returned with a vengeance.

It is difficult to see how helpful moderation might be at such a time. If anything, moderation is a form of surrender. It is a surrender of principle for the sake of a more peaceful life in the Indian summer that remains to us before the deluge breaks.

There seems to be two essential realities that need to be faced. The first is that politics is about the allocation of scarce resources. The cake is finite and can only be allocated once. Second, democracy tends to encourage an almost infinite desire for the state to do things and to

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spend money. Every interest has reasons, often good ones, as to why the public purse should be opened to support them.

At some stage, there has to be a massive collision between these two realities. The resources of the state are finite while the appetites of the demos would appear to be infinite. If we adopt a position of moderation, and comfort ourselves with the idea that all will be well so long as we simply let things slowly evolve, then the final destination will be disaster. If we cannot develop a clear vision of how we are going to deal with the massive problems that await us, they will just happen, leading to chaos and confusion.

Berkowitz does not seem to be interested in the challenges ahead. Rather his concerns appear to be narrowly political: how to manufacture some sort of political consensus. But the current rage of party is largely the consequence of the very real problems now facing America and the West. Crisis begets conflict. Both crisis and conflict must be faced with eyes wide open.

Going back to the principles of eighteenth century politics does not seem to be a very useful path. The crisis of our age requires vision and a degree of consensus. The politics of the age is founded on the rage of party, a set of institutions which are not designed for rapid decisive action, and a lack of real vision regarding the future and what needs to be done. But there is little point in denying this reality and adopting moderation in the hope that it will answer these problems. It may well be the case that real consensus will only come when necessity, that great Machiavellian principle, has forced everyone to appreciate that it is the only way. Realism, not moderation, is the order of the day. n

American 75 Review BookREVIEWS Reviewed by Jonathan Bradley

The rise, fall and resurgence of an iconic rust-belt city The story of a once industrial powerhouse of the Midwest now blighted by drugs and crime

I was introduced to America’s motor city in the winter of 2005, landing at Detroit Metropolitan Wayne County Airport at dawn off a red-eye flight. I was there to visit a family friend who lived, like so many other white folks in the city’s metropolitan area, not in the city itself, but in one of the less dysfunctional suburbs that ring the outskirts — in her case, a working class neighbourhood in the Westside enclave of Livonia.

It was getting ready to snow that day, and the grey skies did little to Detroit City Is the Place to Be: The brighten the city. As my host and I drove Afterlife of an American Metropolis by Mark Binelli around downtown — Detroit long ago Metropolitan Books, 2012 gave itself over entirely to the automobile — the overcast conditions lent even the parts of the city yet to succumb to urban decay an air of hard-scrabble gloom. The refurbished Fox Theatre, the gleaming Renaissance Center hulked over the river, the gigantic sculpted tigers prowling the outskirts of the pristine new ballpark, the uncharacteristic bustle of Greektown, and the rare neighbourhoods in which lavish mansions left over from the city’s more prosperous days were still well-

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kept seemed less a sign of life and more a stubborn refusal to succumb to the popular conception of Detroit as a 139 square mile urban hospice.

My host didn’t try to pretend Detroit was not disintegrating, and tolerated well my prurient fascination with its evacuated boulevards and its acres of inner-city prairie interrupted by the odd boarded-up shopfront or what locals call “party stores” — outlets catering for the ever-resilient demand for liquor, lottery tickets, and payday loans. But she insisted that I also see the parts of the city that defied the death sentence the rest of the nation had written for it. Detroiters, understandably, get prickly if you start to pretend theirs is a city that exists as a relic rather than a real place where actual people — seven hundred thousand of them, in fact — live and, in lesser numbers, work.

There are plenty of writers willing to discuss the death of Detroit: a near cottage industry has sprung up around cataloguing the town’s failures as a cautionary tale for the rest of America. But the challenge for Rolling Stone reporter Mark Binelli lies not in dissecting a corpse but in describing the town as it lives. Detroit City is the Place to Be is subtitled “The Afterlife of an American Metropolis”, and Binelli promises in the introduction to look towards the city’s future, or at least its present. “Detroit-as-whodunit had been done, ad nauseum”, he writes in the introduction. “Rather than relitigate the sins of the past, I hoped to discover something new about the city — specifically, what happens to a once great place after it has been used up and discarded?”

To answer this question, Binelli, who grew up in the area’s suburbs, buys one of the many cheap houses available within the city proper and sets about making himself a local — or, at least, getting to know the locals. Some of the characters that fill these pages are familiar types: union members trying to hang on to decent conditions as their jobs ebb away; corrupt, money-grubbing local politicians; incompetent and

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impenitent auto executives; civil-rights era activists still suspicious of interfering interlopers; coteries of crooks, crack dealers, and scrap iron scavengers; and Detroit’s newest bête noire, the wave of young white artists attracted by cheap rents and the creative opportunities afforded by a blank civic canvas.

But this cast cannot account for Detroit in its messier, less-satisfying reality. Despite the temptation to see the city as something apart from the rest of America, an accident that can be quarantined and forgotten about, Detroit is more than a warning: just as its 20th century successes were America’s, so too do its failures belong to the rest of the country.

“People came to the city because Detroit represented an idea about America they wanted to believe,” says Binelli. Where New York is America’s melting pot crammed entirely within five boroughs and Los Angeles a sprawling expanse dedicated to turning fantasy into reality, even at its peak Detroit’s ambitions were more modest. It developed as a town of efficient factories and tidy middle class homes, not glittering skyscrapers or palaces on palisades. “Progress was inevitable, was the ethos,” says Binelli. “Personal salvation could be achieved through hard work.” He quotes New York Times columnist Anne O’Hare McCormick in 1934: “It belongs to a period of democratised luxuries, with gas stations on every corner, chain stores, moving-picture palaces, glittering automats, broadcast symphonies...” Detroit was remarkable less for the scale of its prosperity and more that it could spread that wealth so far and wide.

But not widely enough. Even when Detroit was prosperous, it was riven by segregation and racial hatred, both of the city and its metropolitan surrounds. Many of the pathologies that infected other American cities of the time, particularly racially discriminatory housing policy, applied to Detroit as well. By the time the city’s white residents began vacating for the suburbs and the 1967 riots had flared up, the rot had begun to set in. Racism still shapes the city’s dysfunction today;

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the wealthy regions refuse to subsidise the poorer core services, surrounding suburbs maintain their own public transport networks, and the sorts of integrated regional policies that could reduce wasteful duplication of services and break the vicious cycle that besets cities with diminishing tax bases are barely considered. “In Detroit,” acknowledges Binelli, “the chances of this ever happening were slim — okay, nonexistent — but daydreaming about the real benefits of such a move could be a tantalizing exercise.”

“Despite the temptation to see the city as something apart from the rest of America, Detroit is more than a warning.”

Daydreaming is a favoured pastime for some Detroiters: what utopia might be built once the city finally extinguishes itself? Some, like the preposterous collection of artists and cultural consorts Binelli trails from industrial performance art setpiece to “ruin porn” photo- op, are eager to embrace the city as a post-modern playground. More realistically, though still somewhat absurdly, are those who dream of establishing inner city farms on the vacant lots left behind when abandoned houses are torn — or, all too often, burned — down. Part of the motivation behind the great migration from the South to the northern industrial cities was people’s desire for a life better than that of their sharecropping past. The US is a first world country; is subsistence farming really a solution for any of its economic woes, even those of Detroit?

Binelli relates these utopian ideas, but he also makes room for Detroit’s dreadfully mundane grotesques as well. A pair of drug dealers murder and dismember an addict and scatter his body parts around their neighbourhood as a warning to rivals, in one of the daily murders the city experiences, and Binelli is the only journalist to show up for

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the trial. A group of citizen crime fighters, the Detroit 300, hunts down crime suspects, and the police welcome the extra support rather than condemn the vigilantism. A gun safety trainer warns his students to be prepared to kill twelve-year-olds for self-defence. One plan proffered by politicians to save the city involves refusing to provide services to the most run-down parts of town. Whatever opportunities Detroit might offer, daily existence there sounds arduous and immiserating in a way that makes the city’s decline seem logical and irreversible. Why would you want to live there?

Detroit City is a curious amalgam of travelogue, urban history, and feature reporting. Binelli’s approach is a granular one, and at times the book reads as if it were a series of magazine articles, each devoted to a new take on the one subject: Detroit and crime; Detroit and politics; Detroit and urban planning. Binelli is not a historian, and his dips into history best serve as anecdotal asides rather than an explication of a solid narrative framework of the city’s history. His greatest attribute is his reporter’s eye — he has a knack for spotting a compelling yarn or pungent detail.

“Detroit isn’t some kind of abstract art project,” one resident tells Binelli. “It’s real for people.” Making it thus is Detroit City’s greatest accomplishment, and the most important part of any discussion of Detroit. This, after all, is a city underpinning the twelfth biggest metropolitan area in the US, and a whole lot of Americans rely on it — and will continue to do so for many decades to come. Forgetting it is not an option. The US has watched Detroit’s decline with a lurid fascination. But as much as America can’t take its eyes off a collapse, it also loves a comeback story. Detroit could have an afterlife yet. n

American 80 Review BookREVIEWS Reviewed by Martin Morse Wooster

How America renewed itself

Could US ingenuity during the war show the way forward to renewing America today?

Over the past 15 years, Arthur Herman has become one of America’s more interesting historians. His books include a history of the British Navy, a revisionist defence of the red-baiting Senator Joe McCarthy, and, most recently, an account of the parallel lives of Mahatma Gandhi and Winston Churchill. His books are large in scope, well told, and quite different from each other in theme and time period.

In Freedom’s Forge, Herman turns his attention to World War II and to the manufacturers whose diligence and Freedom’s Forge: How American ingenuity ensured that Allied forces had Business Produced Victory in World War II the supplies they needed to win the war. by Arthur Herman This book is a traditional history that Random House, 2012 should appeal to readers who enjoy books about engineers who successfully solve tremendous problems.

Anyone who saw the US military in 1939 could see that America was unprepared to fight. Herman provides an illustrative example of American weakness by demonstrating what happened in 1939 when

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General George S. Patton took command of the Second Armored Brigade at Fort Benning. The tanks kept breaking down because of defective nuts and bolts, which the fort’s quartermaster could not supply. Patton ultimately solved the problem by buying nuts and bolts — at a nearby Sears store.

Why were America’s forces so weak? Part of the reason was that New Dealers eager to bloat the welfare state didn’t want to spend money on the military. A second part was because of investigations of defence contractors held by Senator Gerald Nye between 1934 and 1936, which convinced millions of Americans that the “munitions makers” had somehow “tricked” America into entering World War I in order to increase their profits.

Herman clearly dislikes the Nye Committee and the restrictions placed on American arms manufacturers as a result of the committee’s investigations. However, he largely ignores the committee, and never explains why its investigators were wrong. As a result, Herman’s readers won’t fully understand why the American military was so weak in 1938.

In 1917 the US Army tried to command companies to produce what it wanted, and even nationalised the railroads when the trains weren’t moving fast enough to satisfy the generals. By early 1918 it was clear that the Army and Navy were incapable of overseeing industry, and President Woodrow Wilson appointed a War Industries Board, headed by Bernard Baruch, to control production. American factories didn’t successfully convert to military production until the war was nearly over, and the “doughboys” sent to Europe largely fought with British and French equipment. In his memoirs, British prime minister Lloyd George said that it was “one of the inexplicable paradoxes of history that the greatest machine-producing nation” couldn’t supply American troops with guns or tanks.

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In May 1939, President Franklin D. Roosevelt went to Bernard Baruch and asked him what he should do to make sure that American forces had the equipment needed to fight another war. “Who are the top three industrial production men in the United States right now?” the president asked Baruch.

“First, Bill Knudsen,” Baruch responded. “Second, Bill Knudsen. Third, Bill Knudsen.”

Herman shows that Baruch made the right choice. Signius Wilhelm Poul Knudsen (who later changed his name to William S.) arrived in the US in 1900 as a 20-year-old Danish machinist eager to build bicycles. The bicycle craze of the 1890s was fading, and bicycle companies were swiftly converting to building parts for the nascent motorcar industry. The company Knudsen worked for was a Ford subcontractor, and Knudsen’s talents attracted Henry Ford, who hired him to refine his assembly lines. But Knudsen and Ford quarrelled over the future of the company, and Knudsen resigned in 1921, only to be snatched by General Motors.

Employers of this era were obsessed with the ideas of efficiency experts like Frederick Winslow Taylor (whom Herman mistakenly calls “William Taylor”), who claimed that workers’ routines could be reorganised to maximise productivity. Knudsen showed that assembly lines were what needed to be changed, and that an efficient assembly line, using extremely precise machine tools, could turn factories into production powerhouses. His methods ensured that GM would pass Ford to become the world’s largest car company.

Even though Knudsen was a Republican, he accepted Roosevelt’s offer to head the National Defense Advisory Commission. “This country has been good to me and I want to pay it back”, he said, as he went to Washington in May 1940. Knudsen found that the military had very little sense of how much equipment it would need in a war.

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He also had to disillusion those on the left who thought that factories should be seized, converted to military purposes, and then reconverted after the war into state-controlled enterprises.

In meeting after meeting, Knudsen made basic points: it would take at least 18 months to get production rolling, simply because the machine tools needed to run the new plants did not exist. And rather than coercion, businesses had to want to join the defence effort. That meant that they should be able to get a good return on their investments, have enough start-up funds to buy equipment and land, and be able to depreciate their investments in a reasonable amount of time. What Knudsen hoped to do was to create an opportunity for companies to convert their plants to military production, not because they were forced to, but because the conversion made good business sense.

“Herman persuasively shows that defence contractors were so successful because they were decentralised.”

Everything Knudsen wanted American businesses to do would eventually happen. The quasi-governmental Reconstruction Finance Corporation provided seed money, and the depreciation rules were changed so that companies could deduct the costs of wartime equipment in seven years instead of sixteen. The result was that businesses large and small began to sign up. One of the most prominent was Herman’s other protagonist, Henry J. Kaiser.

Kaiser was both an organisational genius and, like many entrepreneurs, a jerk. He delighted in overloading subordinates with far more work than normal people could handle. The assistants who were not crushed by their workload stayed with Kaiser for decades. Kaiser was also a publicity hog whose exploits were celebrated in Man

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From Frisco, possibly the only film ever made about a heroic defence contractor.

Kaiser accumulated scores of enemies. Herman shows how the Navy transferred one crucial contract to the US Maritime Commission just so that they would not have to deal with Kaiser. But Kaiser’s innovative construction methods ensured that his shipyards churned out nearly 3,000 Liberty ships that successfully carried tens of millions of tons of cargo across the Atlantic and Pacific. Kaiser also made sure his workers had good pay and substantial benefits; a health plan he created for his California shipyards evolved into Kaiser Permanente, America’s first health maintenance organisation.

Herman persuasively shows that defence contractors were so successful because they were decentralised. Corporations came up with innovative subcontracting schemes to share contracts that no central planner could have imagined. In fact, the one effort by the US to control production was disastrous. A decision by the Supply, Priorities, and Allocation Board to cease civilian car production as of 15 January 1942 made 400,000 autoworkers and tens of thousands of workers at auto dealerships unemployed. Many of these unemployed workers fled for good defence jobs in California, and Detroit had chronic labour shortages for the rest of the war. Washington learned from its mistakes; while there was some rationing, there were no further restrictions on what manufacturers could produce. Even at the apex of the war in 1943 and 1944, only about a third of America’s industrial production was used for the military. The rest went for civilian consumer goods.

American manufacturers may struggle today. But in Freedom’s Forge, Arthur Herman shows how the ingenuity of American entrepreneurs ensured that US troops had the supplies they needed to win World War II. n

American 85 Review Contributors

Jonathan Bradley is the online editor of American Review.

James Curran is a research associate at the United States Studies Centre at the University of Sydney. A Keith Cameron chair of Australian history at University College Dublin, he is completing a history of US–Australia relations in the Nixon–Whitlam era, to be published in late 2014 by Melbourne University Press.

Steven F. Hayward is the Thomas Smith distinguished fellow at the Ashbrook Center and the William Simon distinguished visiting professor at Pepperdine University’s Graduate School of Public Policy. He is also the author of The Almanac of Environmental Trends and biographer of Ronald Reagan.

John Lee is the Michael Hintze fellow and adjunct associate professor at the Centre for International Security Studies at the University of Sydney. He is also a non-resident senior scholar at the Hudson Institute in Washington DC and a director of the Kokoda Foundation in Canberra.

Anatol Lieven is a professor in the War Studies Department of King’s College London and a senior fellow of the New America Foundation in Washington DC. His is author of Pakistan: A Hard Country.

American 86 Review Contributors

Richard C. Longworth is a senior fellow at the Chicago Council on Global Affairs. He is the author of Caught in the Middle: America’s Heartland in the Age of Globalism.

Megan H. MacKenzie is lecturer in government and international relations at the University of Sydney and the author of Female Soldiers in Sierra Leone: Sex, Security, and Post-Conflict Development.

Greg Melleuish is associate professor of Australian politics and history at the University of Wollongong and author of several books and monographs on conservatism and liberalism.

Clyde Prestowitz is founder and president of the Economic Strategy Institute in Washington, DC and a counsellor to the secretary of commerce in the Reagan administration. He is author of, among other books, The Betrayal of American Prosperity: Free Market Delusions, America’s Decline, and How We Must Compete in the Post-Dollar Era.

Tom Switzer is editor of American Review and The Spectator Australia as well as a research associate at the United States Studies Centre at the University of Sydney.

Ramesh Thakur is director of the Centre for Nuclear Non-Proliferation and Disarmament at the Crawford School of Public Policy at the Australian National University in Canberra.

Martin Morse Wooster has contributed articles to various US journals such as Harper’s, Reason, and the Weekly Standard and is author of Great Philanthropic Mistakes.

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